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Finance Four Problems Set

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Question;1. A municipal bond carries a coupon rate of 8% and is trading at par. What would be the equivalent taxable yield of this bond to a taxpayer in a 40% tax bracket?2. Suppose that Short-term municipal bonds currently offer yields of 4% while comparable taxable bonds pay 5%. Which gives you the higer after tax yield if your tax bracket is.a. Zerob. 10%c. 20%d. 30%3. An Invenstor is in a 40% combined federal plus state bracket. If the corporate bonds office 7.75% yields what must municipal bonds offer for the investor to prefer them to corporate bonds?4. Suppose that Short-term municipal bonds currently offer yields of 4% while comparable taxable bonds pay 5%. Which gives you the higer after tax yield if your taxbracket is.Zero10 %30%

 

Paper#49085 | Written in 18-Jul-2015

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