What is the after-tax holding-period return on the bond

Assignment Help Financial Management

Reference no: EM131320983

A newly issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity is 20 years, and its yield to maturity is 8%, and its face value is $1,000.

a. Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 7% by the end of the year. (Round your answer to 2 decimal places.)

b. If you sell the bond after 1 year, 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 tax treatment. (Round your answer to 2 decimal places.)

c. What is the after-tax holding-period return on the bond? (Round your answer to 2 decimal places.)

Reference no: EM131320983

Questions Cloud

When do researchers use regression analysis : Distinguish among simultaneous (or standard), stepwise, and hierarchical regression.

Develop an action plan for creating your personal brand : Describe what you want your personal brand to be. In the next step, you develop an action plan for creating or enhancing your personal brand. Provide at least one clear example of an experience in this course that has helped, or may help, you move to..

What line is described by a regression equation : Write the general form of a regression equation that has a single predictor variable. Identify the criterion variable, the predictor variable, the regression constant, and the regression coefficient.

Write a java class which allows to vote by party affiliation : Write a Java class (VotingMachine.java) which allows one to vote by party affiliation and will also allow us to query the number of votes for each party and who won the election.

What is the after-tax holding-period return on the bond : A newly issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity is 20 years, and its yield to maturity is 8%, and its face value is $1,000. Find the holding-period return for a 1-year investment period if the bond is selling a..

Write the pseudo code for the main program logic : When a user specifies a price, find any seat with that price and give feedback on the seat row and number and mark the seat as "SOLD". Repeat the process until the user exits the program. Write the pseudo code for the main program logic.

Which is worse--confound variance or error variance why : What are order effects, and how does counterbalancing help us deal with them?

Strategic decision partnering with the brotherhood : Did vineyard vines make a good strategic decision partnering with the brotherhood of the traveling plants? How should vineyard vines proceed with its social media strategy?Was vineyard the right partnership for the brotherhood?

Proceeds from these new shares and operating improvement : Sosa Bus Company had earnings after taxes of $800,000 in the year 2011 with 200,000 shares of stock outstanding. On Jan 1 2010 the firm issued 50,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings..

User Account

All Pages