Municipal bonds are tax-exempt from the Federal income tax. Assume a new 10-year municipal bond has...

Question

Question

Municipal bonds are tax-exempt from the Federal income tax. Assume a new 10-year municipal bond has a 3%/year coupon rate. Wh

Answer 1

Answer #1

coupon rate required on taxable bond=tax free bond rate/(1- tax rate)=3%/(1-40%)=5.0%

the above should be answer

Answer 2

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