Business, 24.12.2019 05:31 ruslffdr

Anewly issued bond pays its coupons once a year. its coupon rate is 4.1%, its maturity is 15 years, and its yield to maturity is 7.1%.

a. find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 6.1% by the end of the year. (do not round intermediate calculations. round your answer to 2 decimal places.)
holding-period return %
b. if you sell the bond after one year when its yield is 6.1%, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? the bond is subject to original-issue discount (oid) tax treatment. (do not round intermediate calculations. round your answers to 2 decimal places.)
c. what is the after-tax holding-period return on the bond? (do not round intermediate calculations. round your answer to 2 decimal places.)
d. find the realized compound yield before taxes for a two-year holding period, assuming that (i) you sell the bond after two years, (ii) the bond yield is 6.1% at the end of the second year, and (iii) the coupon can be reinvested for one year at a 2.1% interest rate. (do not round intermediate calculations. round your answer to 2 decimal places.)
e. use the tax rates in part (b) to compute the after-tax two-year realized compound yield. remember to take account of oid tax rules. (do not round intermediate calculations. round your answer to 2 decimal places.)

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Anewly issued bond pays its coupons once a year. its coupon rate is 4.1%, its maturity is 15 years,...