Answer :
A 10-year 8% municipal bond, quoted on a 6.00 basis, is priced at 105. A 10-year 7% municipal bond, quoted on a 6.00 basis, is priced at 101. The price of the bond is 101.80. Thus, option B is appropriate.
A municipal bond, or "muni," is a type of bond issued by local or state governments, as well as any organizations they establish, such as authorities as well as special districts. In the US, holders of municipal bonds frequently, but not always, receive interest income that is not subject to federal and state income tax.
Municipal bonds, or "munis" for short, are debt securities that are issued by states, cities, counties, and other local organizations to pay for ongoing expenses as well as to finance capital projects like constructing schools, roadways, or sewage systems.
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