Suppose Preun Inc. issues $200 million in 60 day maturity commercial paper at a price of 99.35 par. (commercial paper is like a zero coupon bond. You buy it at a price of less than its par value and it pays the investor par value at the maturity date.) It then uses this money to invest in short term securities yielding 4.8%. What is Preun's annualized rate of return on this strategy?
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