7. Assume that Sues bond is subject to a 30% tax on interest and capital gain. Recal- culate the price Sue paid if the net yield rate is j2 = 5.7% p.a. and all tax payments (interest tax payments and capital gain tax payment) are paid immediately when taxable cash flows occur. Round your result to three decimal places. Select the correct answer.

a. 85.909

b. 87.998

c. 92.332

d. None of above option is correct.

8. Which of following state is correct? Select the correct answer.

a. Based on the question 7, bond price can be lower if Sue does need to pay tax immediately.

b. Based on the question 6, Sues total realised compound yield rate can be higher if the reinvestment rate is lower.

c. The duration of Sues bond can be higher, if the bond coupon rate is lower.

d. None of above statement is correct