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Suppose a foreign investor who holds tax-exempt Eurobonds paying 10.50%

Question : Suppose a foreign investor who holds tax-exempt Eurobonds paying 10.50% : 5147

Suppose a foreign investor who holds tax-exempt Eurobonds paying 10.50% is considering investing in an equivalent-risk domestic bond in a country with a 28% withholding tax on interest paid to foreigners. If 10.50% after-tax is the investor's required return, what before-tax rate would the domestic bond need to pay to provide the required after-tax return?

 

a. 14.58%

 

 

b. 12.83%

 

 

c. 15.46%

 

 

d. 16.33%

 

 

e. 16.92%

 

Solution
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Finance 11 Months Ago 185 Views
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