The bond is treated as an original-issue discount bond

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A newly issued 10-year maturity, 4% coupon bond making annual coupon payments is sold to the public at a price of $860. The bond will not be sold at the end of the year. The bond is treated as an original-issue discount bond.

a. Calculate the constant yield price. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Constant yield price $

b. What will be an investor's taxable income from the bond over the coming year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Taxable income $

Reference no: EM13934387

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