Question: Which security has a higher effective annual interest rate? A). A 6 month T-bill selling at $98,058 with face value of $100,000. B). A coupon

Which security has a higher effective annual interest rate?

A). A 6 month T-bill selling at $98,058 with face value of $100,000.

B). A coupon bond selling at par and paying a 4.2% coupon (2.1% every six months).

EXPLAIN.

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