Question
1. You bought a 10-year, 5% coupon bond for $1,000 and sold it 1 year later for $1,100. The bond pays interest annually. If your
1. You bought a 10-year, 5% coupon bond for $1,000 and sold it 1 year later for $1,100. The bond pays interest annually. If your marginal tax rate is 30%, and 50% of capital gains are taxable, what is the after-tax rate of return on your bond investment? (Round your answer to the nearest whole percent.)
---> I tried 8.5 % and 9 % and it wasn't right.
2. BCE bond has 10 years until maturity and a coupon rate of 8% payable annually, and sells for $1,100. What will be your rate of return if you buy it today and sell it in one year? (Round your answer to 2 decimal places. Use minus sign to enter negative rate of return, if any.)
-----> I tried 1.82 % and it wasn't right.
3. Five years ago you purchased an 8% coupon bond for $975. Today you sold the bond for $1,000. What is your rate of return if all coupons were immediately spent when received?
-----> I tried 8.64 % and 8.72 % and it wasn't right.
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