The Newly Issued Bonds of the Cain Corp

Multiple Choice

The newly issued bonds of the Cain Corp. offer a 6% coupon with semiannual interest payments. The bonds are currently priced at par value. The effective annual rate provided by these bonds must be:

A) equal to 3%.
B) greater than 3% but less than 4%.
C) equal to 6%.
D) greater than 6% but less than 7%.
E) equal to 12%.