On January 1st Julie bought a 7-year, zero coupon bond with a face value of $1,000 and a yield to maturity of 6 percent. Assume that Julie’s tax rate is 25 percent. How much tax will Julie have to pay on the bond the first year she owns it?
a. $15.00
b. $25.00
c. $73.76
d. $ 9.98
e. $83.74
Answer: D
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