A government issues a fixed-interest security paying coupons at a rate of 8% p.a. quarterly in...

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A government issues a fixed-interest security paying coupons at a rate of 8% p.a. quarterly in arrears. The security is to be redeemed at 103% on any coupon payment date from 15 to 18 years after issue, with the exact date of redemption at the discretion of the government. Investor A, who is liable to pay income tax at 20% and capital gains tax at 25%, purchases the fixed-interest security on the date of issue at a price that gives a net yield to redemption of 6.2% p.a. effective. (i) Calculate, showing all working, the price per 100 nominal paid by Investor A. Investor A sells the fixed-interest security 5 years after purchase to Investor B for 106.50 per 100 nominal. (ii) Calculate, using linear interpolation and showing your working, the net effective yield Investor A earns on the total transaction. Give your answer as a percentage rounded to three decimal places. [ A government issues a fixed-interest security paying coupons at a rate of 8% p.a. quarterly in arrears. The security is to be redeemed at 103% on any coupon payment date from 15 to 18 years after issue, with the exact date of redemption at the discretion of the government. Investor A, who is liable to pay income tax at 20% and capital gains tax at 25%, purchases the fixed-interest security on the date of issue at a price that gives a net yield to redemption of 6.2% p.a. effective. (i) Calculate, showing all working, the price per 100 nominal paid by Investor A. Investor A sells the fixed-interest security 5 years after purchase to Investor B for 106.50 per 100 nominal. (ii) Calculate, using linear interpolation and showing your working, the net effective yield Investor A earns on the total transaction. Give your answer as a percentage rounded to three decimal places. [