Question

You bought a $10,000 msft bond with a 4% coupon that pays semiannually. at the time of purchase you paid approximately $98 in accrued interest. at the next coupon date you received $200. how much tax will you pay on this coupon payment if you are taxed at the 15% tax bracket?

a.$30,00
b.$60,00
c.$1470
d.$15,00

Answer 1

To calculate the tax owed on the coupon payment of a bond the received amount must be multiplied by the tax bracket percentage. In this case, it is $200 multiplied by 15%, resulting in a tax payment of $30.00. Therefore, the correct answer is A. $30.00.

Step-by-step explanation:

The original question is regarding the amount of tax to be paid on a coupon payment received from a bond. When a $10,000 Microsoft (MSFT) bond with a 4% coupon that pays semiannually is purchased, the buyer pays approximately $98 in accrued interest.

On the next coupon payment date, the coupon payment received is $200. If the tax rate is 15%, we will calculate the tax owed on this payment.

The tax on the coupon payment can be calculated by multiplying the coupon amount by the tax rate: $200 × 0.15 = $30. Therefore, the correct answer is A. $30.00.