1. The tax treatment of capital gains is a big political issue. Republicans generally favor lower rates on capital gains while Democrats do not. Why is the issue so politically sensitive?
2. Why would a bondholder of a convertible bond exchange its relatively certain stream of cash payments for stock which has no assurance of dividends?
3. You purchased a 25-year zero coupon bond for $450. What is the annual YTM on that bond at the time using (a) annual compounding and (b) semiannual compounding?