Question: Which security has a higher effective annual interest rate? (a) A four-month T-bill selling at $96.5 with face value of $100. (b) A three-year coupon

Which security has a higher effective annual interest rate?

(a) A four-month T-bill selling at $96.5 with face value of $100.

(b) A three-year coupon bond selling at $98 and paying a 10% coupon semi-annually.

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