Find the bonds purchase price

Reference no: EM131948230

Question: A bondholder is subject to a tax of 50% on interest payments at the time interest is received, and a tax (or credit) of 25% on capital gains (or losses) when they are realized. Assume that the capital gain (or loss) on the bond is the difference between the purchase price and the sale price (or redemption amount if held to maturity), and the full amount of each coupon is regarded as interest. For each of the cases in Example, find the bonds purchase price so that the stated yield is the after-tax yield (based on the bond being held to maturity).

Example: A 10% bond with face amount 10000 matures 4 years after issue. Construct the amortization schedule for the bond over its term for nominal annual yield rates of

(a) 8% ,

(b) 10% and

Reference no: EM131948230

Questions Cloud

What is the expected return on the common stock : Boom and Bust Company is financed entirely by common stock that is priced to offer a 20% expected return. If the company repurchases 50% of the stock.

What happened with cambridge analytica : Facebook ethically may use end user data to market to the users. What happened with Cambridge Analytica was different in what way from this allowed usage?

How the article relates to the internal environment : Fully explain how the article relates to the internal environment (strength or weakness) of the company.

Categorize the causes of the events : Categorize the causes of the events(knight capital glitch on August 1,2012) into policy, governance, process, and people failures

Find the bonds purchase price : A bondholder is subject to a tax of 50% on interest payments at the time interest is received, and a tax (or credit) of 25% on capital gains (or losses).

Annual repairs for private : How do we decide whether annual repairs are for private use or not? Is there any legislation or common law case we can refer to?

What are the key differences in salary compensation : What are the key differences in salary compensation for PCNs and TCNs? Do these difference matter?

How can managers handle challenging employees : How can managers handle challenging employees or locations dominate most of their time?

How could using a self-managed team have impacted : After reviewing about conducting effective meetings and outcomes of ineffective meetings, how did these experiences impact decision making or did it

User Account

All Pages