Major Points

In our coverage, when dealing with bonds, we refer to the EAR as the yield to maturity, or YTM (textbooks sometimes treat the YTM as an APR, so be alert). If interest is paid annually, the APR and EAR are equal, but with semiannual interest payments the EAR slightly exceeds the APR. In problem 3 our focus is on the EAR. ................
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