Required:

Dond pays its coupons once a year. Its coupon rate is $4\mathrm{.}4\%,$ its maturity is $15$ years, and its yield to maturity is $7\mathrm{.}4\%.$

a$.$ Find the holding$-$period return for a one$-$year investment period if the bond is selling at a yield to maturity of $6\mathrm{.}4\%$ 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 $6\mathrm{.}4\%,$ 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 $($CP$)$ tax treatment. $($Do not round intermediate calculations. Round your answers to $2$ decimal places.$)$

$\backslash$table$[[$Tax on interest income,$],[$Tax on capital gain,$],[$Total taxes,$]]$

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