ABC Ltd.'s bonds sell for 90% of their face value (assume face value = $100). These bonds come with a coupon rate of 5%. The bonds will mature in 20 years and will pay the coupon semi-annually. Any interest income attracts a 15% tax for the investor. Determine the after-tax YTM for the investor.
ABC Ltd.'s bonds sell for 90% of their face value (assume face value = $100). These bonds come with a coupon rate of 5%. The bonds will mature in 20 years and will pay the coupon semi-annually. Any interest income attracts a 15% tax for the investor. Determine the after-tax YTM for the investor.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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ABC Ltd.'s bonds sell for 90% of their face value (assume face value = $100). These bonds come with a coupon rate of 5%. The bonds will mature in 20 years and will pay the coupon semi-annually. Any interest income attracts a 15% tax for the investor. Determine the after-tax YTM for the investor.
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