You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 13 percent, and 10 years to maturity. You hold the bond for the entire year. Assume semiannual compounding. How much interest income will you have to declare on your tax return?

Q: Assume that you purchased a $10,000 corporate bond. The interest rate is 7.00 percent. What is the…

A: Bond purchased amount (FV) = $10,000Interest rate = 7.00%

Q: On January 1, 2021, Austin plans to pay $1,050 for a $1,000, 12% semiannual bond. He will keep the…

A: Given information: Present value is $1,050 Coupon rate is 12%, Par value of bond is $1,000 Interest…

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: An investor purchases a 30-year U.S. government bond for $1,020. The bond's coupon rate is 9…

A: Given information: Present value of bond is $1,020 Par value of bond is $1,000 Coupon rate is 9%…

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

A: Given,Selling price of bond = $900Coupon Rate = 5%Time period = 10 year  Calculation of Yield to…

Q: A $5,000 bond is offered for sale. It has a stated interest rate of 7% paid ann end of 8 years, the…

A: Price of bond is sum of present value of the interest payment and present value of face value of…

Q: 4. You buy a 4% 10-year $1,000 face value bond for $1,148.14. A year later, you sell the bond for…

A: The rate of return on the bond is calculated as sum of coupon yield and the capital gain yield

Q: Suppose you invest in a municipal bond that pays a yield of 149%. If your marginal tax is 15%, what…

A: A municipal bond is a government debt security issued to raise long-term debt funds. The yield…

Q: You purchase a 20 year semi annually 9% coupon bond with an 11% YTM today. In one year you sell. If…

A: In a sale purchase transaction of a bond, we have to find the 1 year holding period return (HPR).

Q: what is the principal amount to be repaid at the end of ten years? Show your work.

A: Price of the bond is the PV of all future coupons and par value discounted at the YTM. By…

Q: uppose you considering buying a 10-year bond. This bond will pay ou 1603 taka every year for the ext…

A: Price of bond will be the present value of future cash flow from the bond and that would be the…

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

A:

Q: On January 1, 2020, Janet buys a bond for P10,000 that will make coupon payments of P600 after each…

A: A bond is a debt instrument where a sum is forwarded (which can be at a premium or discount) and the…

Q: I buy a 7 yr par bond paying 8% annual. What is the YTM? If I wait 1 year and sell it at a YTM of…

A: YTM is total return earned on bond if bond is held till its maturity.  When the bond is priced at…

Q: On January 1, 2020, Janet buys a bond for P10,000 that will make coupon payments of P600 after each…

A: Data given: Coupon payment = P 600  Maturity value = P 10,000 Rate = 6% t= 2 years New interest rate…

Q: For tax purposes, the implicit annual interest for any one year on a zero coupon bond is equal to…

A: A zero-coupon bond is a bond that does not pay interest on an annual or periodic basis. It is the…

Q: You purchased a bond at a price of $800. In 15 years when the bond matures, the bond will be worth…

A: A bond reveals the debt instrument that allows the issuer to raise funds from the public. The holder…

Q: Over the next three years, the expected path of 1-year interest rates is 1, 2,and 1 percent, and the…

A: Expected Path of the interest rate is 1, 2, 1 percent. Premia is 0, 0.2 and 0.5 for 1-year, 2-years…

Q: You can invest in taxable bonds that are paying a yield of 9.4 percent or a municipal bond paying a…

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: Quinn purchases a bond for $29,000 when the market interest rate is 13% per year, compounded…

A: Bond is a debt security that is issued by organizations to raise debt funds from investors in…

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

A:

Q: You plan to invest in bonds that pay 3.25%, compounded annually. If you invest $10,000 today, how…

A: Given: Interest rate is 3.25% Present value $10,000 Future value = $30,000 Number of years =?

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: You purchased a $1000 20-year bond with a 5 year call provision. If the bond pays $95 annually and…

A: Yield to Call Years 5 coupon amount (PMT)  95 Face value (FV) 1000 Present value 850

Q: The annual payment of a 10-year fixed-income security is $50. The payments are made at the end of…

A: Present value of annuity is computed as follows:-PV= A*wherePV= Present value of annuityA= periodic…

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

A: Here, Particulars Values Par value  $10,000.00 Present value (PV)  $9,500.00 Coupon rate…

Q: Stacy purchases a $60,000 bond for $57,500. The coupon rate is 6% per year payable quarterly. The…

A: The present worth of the bond will be the present value of the coupon and principal payments.

Q: Eren purchased a bond, costing 890, three years ago, with a current price of 925. This bond paid 100…

A: Price of bond =Present value of  value after 4 years +Present value of coupon payment.

Q: Lisa's new firm plans to issue a permanent callable bond with a par value of $1,000 and a nominal…

A: Permanent Callable Bonds are Bonds that can be purchased by the seller at any time after selling the…

Q: You are considering a savings bond that will pay $100 in 8 years. If the interest rate is 2.2%, what…

A: The objective of this question is to find out the present value of a savings bond that will pay $100…

Q: Bill wants to buy a bond. It has a face value of $10,000, a bond rate of 4% (nominal), payable…

A: Solution:- Bond price means the price at which the bond is currently trading in the market. We know…

Q: You purchased a bond at a price of $2,100. In 30 years when the bond matures, the bond will be worth…

A: Rate of return is amount of profit earned on investment based on initial investment.Purchase price…

Q: As part of your inheritance, you received a bond that will pay interest of php$700 every 6 months…

A: The term bonds refer to the debt instruments that are issued with a motive to raise debt from the…

Q: 30) Suppose that you currently hold a bond with a face value of $1000, six-year maturity that pays 8…

A: Variables in the question:Face value=$1000Coupon rate=8% (annual payment)Reinvestment rate=9%N…

Q: You purchased a $1000 10-year bond that pays $95 annually. If current interest rates are 11.25%,…

A: Yield to maturity  Years 10 coupon amount (PMT)  95 Face value (FV) 1000 Yield rate  11.25%…

Q: b. John needs to pay $55,000, $60,000 and $65,000 at the end of next 3 years respectively. The…

A: i) Duration of the obligation will be,   = Σ( PV of CF*n) / Σ PV of CF    ;  PV of CF = Present…

Q: If you want to receive $500 every three months for 10 years by investing in a bond that has a face…

A: The Bond's current price is the present value of its expected future cash flow, which is discounted…

Q: Suppose Harry Davis issues 30-year debt with a par value of $1,000 and a coupon rate of 10%, paid…

A: We need to use approximation method for calculation of cost of debt Cost of debt =I(1-T)…

Q: Suppose Roberto is considering a 12-year bond with a face value of $2,000 and a rate of 8% payable…

A: Face value = $ 2,000 Coupon rate = 8% Semi annual coupon amount = 2000*0.08/2 = $ 80 Years to…

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.