A zero coupon bond with a face value of $1,000 matures in 15 years. The bond has a yield to maturity of 7 percent. If an investor buys the bond at the beginning of the year, how much money in taxes will the investor have to pay on the zero coupon bond the first year. Assume that the investor has a 25 percent marginal tax rate.

A zero coupon bond with a face value of $1,000 matures in 15 years. The bond has a yield to maturity of 7 percent. If an investor buys the bond at the beginning of the year, how much money in taxes will the investor have to pay on the zero coupon bond the first year. Assume that the investor has a 25 percent marginal tax rate.

A zero coupon bond with a face value of $1,000 matures in 15 years.  The bond has a yield to maturity of 7 percent.  If an investor buys the bond at the beginning of the year, how much money in taxes will the investor have to pay on the zero coupon bond the first year.  Assume that the investor has a 25 percent marginal tax rate.





a. $5.25
b. $5.44
c. $5.99
d. $6.25
e. $6.34








Answer: E


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