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A newly issued bond pays its coupons once annually. Its coupon rate is 6.7%, its maturity is 20 years, and its yield to maturity is

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A newly issued bond pays its coupons once annually. Its coupon rate is 6.7%, its maturity is 20 years, and its yield to maturity is 7.5%. Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 6.5% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) If you sell the bond after 1 year, 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 tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.) What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Find the realized compound yield before taxes for a 2-year holding period, assuming that (1) you sell the bond after 2 years, (2) the bond yield is 6.5% at the end of the second year, and (3) the coupon can be reinvested for 1 year at a 3% interest rate. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Use the tax rates in part (b) to compute the after-tax 2-year realized compound yield. Remember to take account of OID tax rules. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)

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