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Bond par value:                         $1,000               &nbs

Bond par value:                         $1,000                          Coupon interest rate:                10%

Market interest rate:                 10⅞%                           Time to maturity:                      5 years

(1):            What is the bond price when interest payments are paid annually?

(2):            Municipal bonds receive special tax treatment. What is this special tax treatment and why is it applied to municipal bonds only? (25 word limit)

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