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1) A government bond matures in 5 years, makes annual coupon payments of 5
1) A government bond matures in 5 years, makes annual coupon payments of 5.3% and offers a yield of 3.3% annually compounded. Assume face value is $1,000. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) a. Suppose that one year later the bond still yields 3.3%. What return has the bondholder earned over the 12-month period? Rate of return % b. Now suppose that the bond yields 2.3% at the end of the year. What return did the bondholder earn in this case? Rate of return %
2)a self-employed taxpayer, purchased a point-of-sale machine for use in her business. how does linn classify this property for tax purposes? personal, intangible, business-use property. personal, tangible, business-use property. real, business-use property. real, investment-use property.
Expert Solution
1) As the yield is still the same 3.3%, the rate of return =3.30%b]Current price = 1000/1.033^5+53*(1.033^5-1)/(0.033*1.033^5) =$ 1,090.81Price after 1 year = 1000/1.023^4+53*(1.023^4-1)/(0.023*1.023^4) =$ 1,113.41Rate of return = (53+1113.41-1090.81)/1090.81 =6.93%
2)
The machine Used By linn can be classify as follows:
Personal
Tangible
Business Use Property
Short Explaination:-
Tangible personal property is the opposite of real property, in a sense, as real property is immovable. In comparison to intangible personal property, tangible property can be touched. Consider property such as furniture, machinery, cell phones, computers, and collectibles which can be felt compared to intangibles such as patents, copyrights, and non-compete agreements that cannot be seen or touched.
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