Using the information in problem 26, calculate your after-tax rate of return on your bond investment assuming that your marginal tax rate is 35%. You pay tax on the interest when it is received.
a. All coupons were immediately spent when received.
b. All coupons were reinvested in your bank account, which pays 1% interest until the bond is sold.
c. All coupons were reinvested at 8.64% until the bond is sold.