Explain the differences in taxation of income from municipal bonds, from U.S. Treasury bonds, and from corporate bonds.
Answer to relevant QuestionsFor several institutional participants in the bond market, explain what type of bond each is likely to purchase and why.Discuss the difference between a foreign bond (e.g., a Samurai) and a Eurobond (e.g., a Euroyen issue).What are the important assumptions made when you calculate the promised yield to maturity? What are the assumptions when calculating promised YTC?Option-adjusted duration and effective duration are alternative measures used by analysts to evaluate fixed-income securities with embedded options. Briefly describe each measure, and how to apply each to the evaluation of ...Calculate the Macaulay duration of an 8 percent, $1,000 par bond that matures in three years if the bond’s YTM is 10 percent and interest is paid semiannually.a. Calculate this bond’s modified duration.b. Assuming the ...
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