1. ABC Bank has purchased a bond that has a coupon rate of 7.5% and a face value of $1,000. It has 5 years to maturity and is currently selling in the market for $1,175. The bond makes annual coupon payments. ABC Bank plans on selling this bond at the end of 3 years for $1,195 (excluding interest). What is the holding period return on this bond?

2. ABC Bank has purchased a bank-qualified municipal bond with a coupon rate of 4.5%. The bank has had to borrow funds to make this purchase at a cost of 3.15%. The bank is in the 25% tax bracket. What is the net after-tax return on this bank-qualified municipal bond?