You buy a 10-year $1,000 par value zero-coupon bond priced to yield 6%. You do not sell the bond. If you are in a 28% tax bracket, you will owe taxes on this investment after the first year equal to ________.

Question

Quizplus · Accepted Answer

P₁₀ = 11eaaae8_8b5d_66a8_a4b8_25a8f5b0d141_TB6474_11 = $558.39 P₉ = 11eaaae8_8b5d_66a9_a4b8_b1f7667d9a94_TB6474_11 = $591.90 Taxes owed ($591.90 − $558.39)(.28) = $9.38

You Buy a 10-Year $1,000 Par Value Zero-Coupon Bond Priced