An investor in a country with an original issue discount tax provision purchases a 20 year zero-coupon
Question:
An investor in a country with an original issue discount tax provision purchases a 20 year zero-coupon bond at a deep discount to par value. The investor plans to hold the bond until the maturity date. The investor will most likely report:
A. A capital gain at maturity.
B. A tax deduction in the year the bond is purchased.
C. Taxable income from the bond every year until maturity.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (2 reviews)
The correct answer is C Taxable income from the bond every year until maturity An origin...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
4.40+
65+ Reviews
86+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Assume that a company issues bonds in the hypothetical country of Zinland, where the local currency is the zini (Z). There is an original issue discount tax provision in Zinlands tax code. The...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
(a) By what percentage does your rest mass increase when you climb 30 m to the top of a ten-story building? Are you aware of this increase? Explain. (b) By how many grams does the mass of a 120-g...
-
Why could an insurance company with substantial investments in real estate represent a risk?
-
Use the following to calculate profit at each quantity of output. (Total) Output Price Total Revenue Total Cost (Q) (P) (TR) (TC) 0123456 $1,900 $ 0 $1,000 $1,700 $ 1,700 $2,000 $1,650 $ 3,300 $2,800...
-
What is a paradigm?
-
a. Prepare a table of entities and activities for Good Buy, Inc. or CentralRisk Insurance Company. b. Construct a context diagram based on the table you prepared in part (a). Use Microsoft Visio or...
-
Your opportunity cost for capital is 8%. What is the project's Payback period, Net present value (NPV), and Internal rate of return? Assume the piece of equipment has no salvage value. Do you approve...
-
A bond that is characterized by a fixed periodic payment schedule that reduces the bonds outstanding principal amount to zero by the maturity date is best described as a: A. Bullet bond. B. Plain...
-
Relative to domestic and foreign bonds, Eurobonds are most likely to be: A. Bearer bonds. B. Registered bonds. C. Subject to greater regulation.
-
In Exercises 123, solve each equation or inequality. Other than , use interval notation to express solution sets of inequalities and graph these solution sets on a number line. x 4x-x + 4 = 0 +3
-
An offeror extends an offer to settle a claim for \($15,000.\) The offeree responds, Could your \($15,000\) offer be increased to \($17,500?\) Is this a rejection?
-
The rise of portable electronic devices such as laptops and smart phones is made possible in part by the availability of lithium ion battery technology. Unfortunately, in some cases these batteries...
-
You are considering accepting a job at Big Business Corporation. As a condition of employment, you must sign a covenant not to compete with Big Business in which you agree that when your employment...
-
The opening example to this chapter noted that unmanned aircraft systems or drones can be used for a wide range of business or government activities. In 2016, the Federal Aviation Administration...
-
Robert Pierre and Jon LeFranc are assembly line workers employed by Manufacturing Inc., a manufacturing company in Dayton, Ohio. Robert and Jon are good friends as they grew up in the same town in...
-
Describe the various items that a signed confession should contain and the reasons they should be included in it.
-
In Problem use geometric formulas to find the unsigned area between the graph of y = f(x) and the x axis over the indicated interval. f(x) = x + 5; [0, 4]
-
Identify all the problems Target Canada encountered that prevented it from becoming a successful retailer. What were the management, organization, and technology factors that contributed to these...
-
How much of Target Canadas problems were technology based? Explain your answer.
-
How responsible was management for Target Canadas problems? Explain your answer.
-
What form listed below is available to be generated in the Premium Edition, but not in the Deluxe Edition or Free Edition?
-
Because liability is a major factor in health care delivery and because health care delivery systems and practitioners seek to minimize liability whenever possible, risk management has become a...
-
After several days of interviewing the parties involved, Daniel contacted Karen at the mayor s office and told her, I think we might be able to work with this situation, but I get a sense that...
Study smarter with the SolutionInn App