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help with Part E only please A newly issued bond pays its coupons once a year. Its coupon rate is 4.6%, its maturity is 10
help with Part E only please
A newly issued bond pays its coupons once a year. Its coupon rate is 4.6%, its maturity is 10 years, and its yield to maturity is 7.6% a. Find the holding period return for a one-year investment period if the bond is selling at a yield to maturity of 6.6% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Holding period retum 14,90 % b. If you sell the bond after one year when its yield is 6.6%, 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 Total taxes $ $ 24.17 17.40 41.57 $ c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Anne-tax holding-period retum 9.67% d. Find the realized compound yield before taxes for a two-year holding period, assuming that (1) you sell the bond after two years, () the bond yield is 6.6% at the end of the second year, and (iii) the coupon can be reinvested for one year at a 2.6% Interest rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Realized compound yield before taxes 10.57% 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 % Step by Step Solution
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