Given the Following Bond Information

question 38

Multiple Choice

Given the following bond information:
What would be the taxable income on this bond if it were purchased at this price on December 20th and sold a year later for a price of 103.00? Assume face value of $10 000 and a semi-annual coupon payment.

• A)Taxable capital gain of $400 and interest of $735
• B)Taxable capital loss of $400 and interest of $735
• C)Taxable capital loss of $200 and interest of $735
• D)Taxable capital gain of $200 and interest of $656

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Definitions:

Inventory Purchases

Transactions involving buying goods to be sold in the normal course of business, typically counted as a current asset.

Cost of Goods Sold

Cost of Goods Sold (COGS) represents the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Average Collection Period

The mean duration required by a business to receive payments due from its clients.