A municipal bond selling at par currently yields 6.5%. Bob's marginal tax rate is 20%.How much...
A municipal bond selling at par currently yields 6.5%. Bob's marginal tax rate is 20%.How much should a corporate bond selling at par yields so that Bob is indifferent between this two bonds?
Homework Answers
| Municipal bond rate = Taxed bond rate * (1-Tax rate) |
| 6.5 = Taxed bond rate * (1-0.2) |
| Taxed bond rate = 8.13 |
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A municipal bond selling at par currently yields 6.5%. Bob's
marginal tax rate is 20%.How much...
1)- A municipal bond selling at par currently yields 7.5%. A corporate bond selling at par...
1)- A municipal bond selling at par currently yields 7.5%. A corporate bond selling at par currently yields 10%. At what marginal tax rate would an investor be indifferent between this two bonds? 2)- A corporate bond selling at par currently yields 7.5%. Amy's marginal tax rate is 20%. How much should a municipal bond selling at par yields so that Amy is indifferent between this two bonds? 3)- A municipal bond selling at par currently yields 6.5%. Bob's marginal...
A corporate bond selling at par currently yields 7.5%. Amy's marginal tax rate is 20%. How...
A corporate bond selling at par currently yields 7.5%. Amy's marginal tax rate is 20%. How much should a municipal bond selling at par yields so that Amy is indifferent between this two bonds?
Debt issued by Southeastern Corporation currently yields 8%. A municipal bond of equal risk currently yields...
Debt issued by Southeastern Corporation currently yields 8%. A municipal bond of equal risk currently yields 5%. At what marginal tax rate would an investor be indifferent between these two bonds? 30% 37.5% 25% 33%
1) The yield on a corporate bond is 12%, and it is currently selling at par....
1) The yield on a corporate bond is 12%, and it is currently selling at par. The marginal tax rate is 20%. A par value municipal bond with a coupon rate of 10% is available. Which security is a better buy? 2) Following are the features of a mortgage loan: Loan amount $100,000 Nominal interest rate 6.2% Term – 30 years (Fixed) Required: (a) Calculate the required monthly mortgage payment. (b) Calculate the amount of interest and the repayment of...
A 5-year corporate bond yields 8.00%. A 5-year municipal bond of equal risk yields 6.50%. Assume...
A 5-year corporate bond yields 8.00%. A 5-year municipal bond of equal risk yields 6.50%. Assume that the state tax rate is zero. At what federal tax rate are you indifferent between the two bonds? (Round your final answer to two decimal places.) a. 15.56 b. 14.63 c. 21.56 d. 18.75 e. 20.06 please show work
A tax-exempt municipal bond has a yield of 6.36%. What should be the yield (in %,...
A tax-exempt municipal bond has a yield of 6.36%. What should be the yield (in %, to the nearest 0.01%) on an otherwise similar corporate bond to make an investor with the 22% marginal tax rate indifferent between the two bonds? E.g., if your answer is 7.145%, record it as 7.15.
a taxable bond pays 7.8% and a municipal bond pays 5%. what must your marginal tax...
a taxable bond pays 7.8% and a municipal bond pays 5%. what must your marginal tax rate be to make you indifferent between the two bonds
Corporate bonds issued by Johnson Corporation currently yield 9%. Municipal bonds of equal risk currently yield...
Corporate bonds issued by Johnson Corporation currently yield 9%. Municipal bonds of equal risk currently yield 6.5%. At what tax rate would an investor be indifferent between these two bonds? Round your answer to two decimal places.
A municipal bond has yield to maturity of 5.08 percent. A comparable corporate bond has yield...
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...
3. A municipal bond with a face value of $1,000 is paying a coupon rate of...
3. A municipal bond with a face value of $1,000 is paying a coupon rate of 9%. If an investor's tax rate is 30%, what rate of return should a similar corporate bond pay to make the investor indifferent between the two bonds?
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...
3. A municipal bond with a face value of $1,000 is paying a coupon rate of 9%. If an investor's tax rate is 30%, what rate of return should a similar corporate bond pay to make the investor indifferent between the two bonds?
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