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AAFM Exam GLO_CWM_LVL_1 Topic 1 Question 84 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 84
Topic #: 1

[All GLO_CWM_LVL_1 Questions]

You are considering investing in following bond:

Your income tax rate is 34 percent and your capital gains tax is effectively 10 percent. Capital gains taxes are paid at the time of maturity on the difference between the purchase price and par value. What is your approximate post-tax yield to maturity on this bond?

A10.91%

B11.38%

C9.07%

D11.78%

Show Suggested Answer

Suggested Answer: C

by Theodora at Jul 07, 2024, 08:52 PM

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Phillip

1 months ago

This bond better be made of solid gold at those yields. Time to consult my financial advisor... and my crystal ball.

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Clay

1 months ago

Wait, is this a trick question? I feel like I'm about to fall into a tax-themed trap.

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Dierdre

6 days ago

User 2: So, we need to consider both income tax rate and capital gains tax rate, right?

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Chantell

11 days ago

User 1: Don't worry, it's not a trick question. Just need to calculate the post-tax yield to maturity.

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Tresa

2 months ago

Ah, the joys of tax calculations. Guess I should've paid more attention in that finance class!

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Emelda

19 days ago

C) 9.07%

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Omer

1 months ago

B) 11.38%

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Salena

2 months ago

A) 10.91%

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Dyan

2 months ago

11.78%? That seems suspiciously high. I'll double-check my work to make sure I'm not missing anything.

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Maurine

2 months ago

This question is tricky! Gotta remember to factor in both income tax and capital gains tax. Time to break out the calculator.

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Delisa

6 days ago

I'm leaning towards B) 11.38%

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Lashanda

7 days ago

B) 11.38%

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Lizbeth

21 days ago

I think it's A) 10.91%

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Gussie

1 months ago

B) 11.38%

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Mendy

1 months ago

A) 10.91%

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Ellen

1 months ago

I think it's A) 10.91%

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Raylene

2 months ago

A) 10.91%

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Jeanice

2 months ago

But don't forget to consider the taxes, it might affect the post-tax yield

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Remona

2 months ago

I disagree, I believe the correct answer is D) 11.78%

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Jeanice

3 months ago

I think the answer is A) 10.91%

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