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A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year The Wall Street Journal

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A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year The Wall Street Journal reports the ask price for the bond on January 30 at 100 250, What is the invoice price of the bond? The coupon period has 182 days. (Do not round intelmediate calculations. Round your answer to 2 decimal places.) Invoice price A newly issued bond pays its coupons once a year. Its coupon rate is 4.8% , its maturity is 20 years, and its yield to maturity is 7 8% a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 6 8% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Holding-period return b. If you sell the bond after one year when its yield is 6 8%, 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 (OID) tax treatment (Do not round intermediate calculations. Round your answers to 2 decimal places) Tax on interest income Tax on capital gain S Total taxes c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) After-tax holding-period return % d. Find the realized compound yield before taxes for a two-year holding period, assuming that (i) you sell the bond after two vears. (ii) the bond yield is 6.8% at the end of the second year and (ii) the coupon can be reinvested for one year at a 2 8% interest rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Realized compound yieid before taxes e. Use the tax rates in part (b) to compute the after-tax two-year realized compound yield Remember to take account of OID tax rules (Do not round intermediate calculations. Round your answer to 2 decimal places.) After-tax two-year realized compound yield

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