After-tax rate of return on Taxable Bond = (1 - 0.21)(0.082) = 6.48%
So,
One should buy municipal bond as it's yield is higher.
You can invest in taxable bonds that are paying a yield of 8.2 percent or a...
Question 15 1p You can invest in taxable bonds that are paying a yield of 9.6 percent or a municipal bond paying a yield of 7.85 percent. Assume your marginal tax rate is 21 percent. What is the after-tax rate of return on the taxable bond? 6.20% 12.15% 7.58% 9.59% None of these is correct
Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 7.50 percent for an investor in the 15 percent marginal tax bracket? (Round your answer to 2 decimal places.)
Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 6.00 percent for an investor in the 28 percent marginal tax bracket? (Round your answer to 2 decimal places.)
A municipal bond has yield to maturity of 5.08 percent. A comparable corporate bond has yield to maturity of 7.24 percent. Which of these two bonds should an investor with a marginal tax rate of 28 percent buy? A. The corporate bond because it offers a higher after-tax yield to maturity. B. The corporate bond because its stated yield to maturity of 7.24 percent is higher than the municipal bond's stated yield to maturity of 5.08 percent. CC. The municipal...
You are an investor in the 34% marginal tax bracket. You are looking to invest some of your funds in a fixed income security. You see a Mecklenburg County municipal bond with a yield of 2.75%. The other bond you are considering is a Ford Motor Company corporate bond yielding 4.00%. On the basis of taxable equivalent yield, which bond would you choose? Answers: A. The municipal bond because its after-tax yield is higher B. The municipal bond because its...
You can invest in either corporate bonds which yield 4.18%, or municipal bonds (of equal risk) which yield 3.09%. Which investment should you choose for cases A and B? Ignore state income taxes: A. Your personal tax rate is 35% B. Your personal tax rate is 14%
A municipal bond you are considering as an investment currently pays a yield of 6.82 percent. a. Calculate the tax equivalent yield if your marginal tax rate is 28 percent. b. Calculate the tax equivalent yield if your marginal tax rate is 21 percent.
QUESTION 6 Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 6.00 percent for an investor in the 35 percent marginal tax bracket? (Round your answer to 2 decimal places.) 17.14% 6.00% 9.23% 2.10%
Personal After-Tax Yield Corporate bonds issued by Johnson Corporation currently yield 12%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds? Round your answer to two decimal places. % Corporate After-Tax Yield The Shrieves Corporation has $15,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds, which yield 9.25%, state of Florida muni bonds, which yield 6% (but are not taxable), and AT&T...
You can invest in either corporate bonds which yield 4.21%, or municipal bonds (of equal risk) which yield 3.14%. Which investment should you choose for cases A and B? Tenore state income taxes A. Your personal tax rate is 35% B. Your personal tax rate is 15% Please show your calculation for both cases going from Monito Corporate bond, and once again from Corporate to Munibond equivalent interest rates, In other words, your calculations will cover two different situations for...