To calculate the after-tax return of the bond, we can use the following formula:

$\text{After-tax return} = \text{Pre-tax return} \times (1 - \text{Tax rate})$

Given:

• Pre-tax return = 10.54%
• Tax rate = 10% (0.10)

Now, we plug these values into the formula:

$\text{After-tax return} = 10.54\% \times (1 - 0.10)$ $\text{After-tax return} = 10.54\% \times 0.90$ $\text{After-tax return} = 9.486\%$

So, the after-tax return is 9.49%.

Would you like further clarification or details?

Here are 5 related questions you might find interesting:

1. How does the marginal tax rate affect bond returns?
2. What is the difference between corporate bonds and government bonds in terms of tax?
3. How would a higher tax bracket impact after-tax returns?
4. What are A-rated bonds, and why are they considered safer?
5. How does bond maturity affect its return?

Tip: When comparing investment options, always consider the after-tax return to get a more accurate