$34$

You buy a $10-$year $$1,000$ par value $3\mathrm{.}50\%$ annual$-$payment coupon bond priced to yield $5\mathrm{.}50\%.$ You do not sell the bond at year$-$end. If you are in a $15\%$ tax bracket, at year$-$end you will owe taxes on this investment equal to

Multiple Choice

$$3\mathrm{.}49$

$$5\mathrm{.}25$

$$7\mathrm{.}01$

$$8\mathrm{.}25$