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Answer the following: A. You are considering investing in a bond with a coupon rate of 8% and a maturity period of 5 years from

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Answer the following: A. You are considering investing in a bond with a coupon rate of 8% and a maturity period of 5 years from now. The bond is currently trading at Rs 860 The par value of the bond is Rs 1,000 Your income tax rate is 33 percent and your capital gains tax is effectively 10 percent Capital gains taxes are paid at the time of maturity on the difference between the purchase price and par value. What is your post-tax yield to maturity from this bond? B. What is the relationship between coupon rate, price and yield to maturity of a bond? (Marks.5+5) Answer the following: A. You are considering investing in a bond with a coupon rate of 8% and a maturity period of 5 years from now. The bond is currently trading at Rs 860 The par value of the bond is Rs 1,000 Your income tax rate is 33 percent and your capital gains tax is effectively 10 percent Capital gains taxes are paid at the time of maturity on the difference between the purchase price and par value. What is your post-tax yield to maturity from this bond? B. What is the relationship between coupon rate, price and yield to maturity of a bond? (Marks.5+5)

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