You buy a 10-year $1,000 par value 4.60% annual-payment coupon bond priced to yield 6.60%. You do not sell the bond at year- end. If you are in a 15% tax bracket, at year-end you will owe taxes on this investment equal to

Q: Suppose your organization has issued a 30 year, 1,000,000 par-value bond with semi-annual coupons of…

A: Offer for redemption should be done if market interest rates are above the coupon rate and should…

Q: You have a 1-year investment horizon. You are deciding on a 7.4% coupon bond that matures in 10…

A: The net return of an investment depends upon the purchase price, sale price, taxes, and the time…

Q: the owners choose to invest in bonds instead, they look at a $57,750.00 bond set to mature in 6…

A: Price of bond is the present value of coupon payment plus present value of the par value of the bond…

Q: Suppose you own a 30-year bond issued by JL Chemicals with a face value of $1,000 paying a…

A: Bonds price is always linked with the interest rates as the price of the bond is directly inversely…

Q: Monster Limos plans to issue new bonds that have the same yield as its existing bonds, which have a…

A: Yield to maturity (YTM) If coupon is paid semiannually, then semiannual YTM, considering total…

Q: An investor purchases a 30-year U.S. municipal bond for $840. The bond’s coupon rate is 10 percent…

A: We know all the cash flows associated with the bond along with the timing. We need to find the…

Q: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…

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Q: bond

A: 1) To calculate which bond is more beneficial we have to calculate the YTM. Formula for YTM is: YTM…

Q: Suppose your organization has issued a 30 year, 1,000,000 par-value bond with semi-annual coupons of…

A: Bonds are the debt security which is offered or issued by corporates or the government to collect…

Q: You will be paying $8,600 a year in tuition expenses at the end of the next two years. Bonds…

A: Here,AnnualObligation is $8,600Yield is 7%Time Period is 2 years

Q: A newly issued 10-year maturity, 6% coupon bond making annual coupon payments is sold to the public…

A: Question 1:Constant yield price = $803.62 Question 2:Investors taxable income= $…

Q: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…

A: Bonds are obligation securities issued by governments, districts, or enterprises to raise capital…

Q: If the current price of a 10-year 4.5% coupon bond which pays semiannually is $96.10, what is its…

A: Here, Face value (FV) = $100 Coupon rate = 4.5% semiannually Coupon payments (PMT) = (4.5% of 100)/2…

Q: You are considering purchasing a 30-year bond for $1500. If the coupon rate is 5.7% APR paid…

A: A bond is an instrument that represents the loan that is made by the investor to the company and…

Q: 6) You buy a 5-year bond that pays a $4 coupon each year for five years (first coupon paid the end…

A: Bonds are debt instruments issued by companies. The issuing company pays coupons or interest to the…

Q: You are considering a 15-year, $1,000 par value bond. Its coupon rate is 11%, and interest is paid…

A: The objective of the question is to calculate the price of a bond given its par value, coupon rate,…

Q: An insurance company must make payments to a customer of $20 million in 1 year and $8 million in 5…

A: Zero-coupon bond Bonds that are issued at less than par and that pay no interest to bondholders are…

Q: the coupons at a rate of 4.95 percent. If you s yield? (Do not round intermediate calculatio $…

A: Future value refers to the concept of determining the present worth of an asset or investment at…

Q: You are considering a 30-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid…

A: Bond is financial security used by organizations to raise debt funds. Bond carries fixed coupon that…

Q: You are considering a 20-year, $1,000 par value bond. Its coupon rate is 11%, and interest is paid…

A: Compound = n = Semiannually = 2Time = t = 20 * 2 = 40Face Value = fv = $1000Coupon Rate = c = 11 / 2…

Q: 1. If the bond rate is 2%, will the bond be sold at a premium or a discount? Explain your answer.

A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…

Q: You are considering a 25 year, $1,000 par value bond.  Its coupon rate is 8%, and interest is paid…

A: Bond price is the discounted present value of the future financial flow that a bond will produce. It…

Q: A newly issued 10-year maturity, 5% coupon bond making annual coupon payments is sold to the public…

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Q: help

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Q: You own a 8 year bond that has a face value of $20,000 and pays 10% a year in interest, once a year,…

A: Note: Here the amount of principal is not correctly given as full stop is used instead of a comma.…

Q: A corporation is planning to sell its 90-day commercial paper to investors offering a 10.2 percent…

A: Yield of corporate bond is rate of return provided by bond that depends on the many risk factors…

Q: You bought a $1,000 face value Suffolk County, NY 10-year bond with equal annual amortization. A)…

A: To the bond holder up to the bond's maturity date, interest is paid in the form of coupons.…

Q: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…

A: Present value of all the expected cash flows as coupon and par value is the bond price. Cash flows…

Q: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…

A: Default rates on municipal bonds have been comparatively lower than those on corporate debts. This…

Q: You are considering a 15-year, $1,000 par value bond. Its coupon rate is 10%, and interest is paid…

A: A bond is the debt instrument issued by a company to the investors willing to invest in the company.…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.