= 4. Consider a bond with a face value of $100,000. Suppose that the bond pays coupons semi-annually at a rate of i(2) 10% per annum. The coupon payments are made on 15 July and on 15 January and the bond matures on 15 July in three years' time. (The first coupon payment is therefore due in six months' time). (a) Calculate the price paid for the bond assuming a yield of 8.5% per annum with semi-annual compounding. (b) Suppose that an investor pays the price determined in part (a). Suppose also that this investor pays tax at 15% on taxable income and capital gains. Capital losses can be treated as a negative capi- tal gain and offset against tax obligations. Stating any assumption required, calculate the after-tax yield earned by this investor.

Can you explain b more? I'm not entirely comprehending it.

ner question Will save this response. Quèstion 6 Which qualitative characteristic is an ingredient of relevance? O understandability O materiality O neutrality O representational faithfulness A Moving to another question will save this response. Type here to search acer F6 F7 F8 F3 F4 F5 F1 F2 近

I have problems in understanding the concept of "risk aversion" Which of the following is correct? i. A more risk averse person would require less return to face the face same risk as a less risk averse person i. No, he would require more return because his aversion is higher ii. They both would require the same return, because in the final analysis, risk aversion, does not matter. iv. Risk aversion is morally wrong, so forget about the concept, nothing to understand!