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can you please explain 6d for zero coupon thats the only question i got wrong 6 Assume you have a 1-year investment horizon and are
can you please explain 6d for zero coupon thats the only question i got wrong
6 Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 8 % coupon rate and pays the $80 coupon once per year. The third has a 10% coupon rate and pays the $100 coupon once per year a. If all three bonds are now priced to yield 8 % to maturity, what are the prices of: the zero-coupon bond; (i) the 8 % coupon bond; (ii) the 10% coupon bond? (Round your answers to 2 decimal places.) 10 points Zero Coupon 8% Coupon 10 % Coupon 1,134.20 463.19 $ 1,000.00 $ Current prices eBook Print b. If you expect their yields to maturity to be 8% at the beginning of next year, what will be the price of each bond? (Round your answers to 2 decimal places.) References Zero Coupon 8% Coupon 10 % Coupon 500.25 $ 1,000.00$ 1,124.94 Price 1 year from now $ c. What is your before-tax holding-period return on each bond? (Round your answers to 2 decimal places.) 8% Coupon 8.00% Zero Coupon 10% Coupon 8.00% 8.00% Pre-tax rate of return d. If your tax bracket is 30 % on ordinary income and 20 % on capital gains income, what will be the after-tax rate of return on each bond? (Round your answers to 2 decimal places.) Zero Coupon 8% Coupon 10% Coupon 6.46 % 5.60 % 5.52% After-tax rate of returnStep by Step Solution
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