flat tax rate is 30% on all income. you want to invest in two bonds. present yield to maturity is 4.36. what is the equ...
Homework Answers
rate positively .. let me know if you need any clarification..
| Municipal bond has no tax implication. | ||||
| therefore even lower yield to maturity is good for these bond | ||||
| equivalent YTM for municipal bond = | 4.36%*(1-30%) | 3.05% | ||
| therefore answer = | 3.05% | |||
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flat tax rate is 30% on all income. you want to invest in two bonds. present yield to maturity is 4.36. what is the equ...
You live in a country with a flat tax rate of 30% on all income, except for certain classes of tax-free municipal bonds....
You live in a country with a flat tax rate of 30% on all income, except for certain classes of tax-free municipal bonds. You are considering investing in two bonds that are equally risky in every respect except for their tax treatment. The present yield-to-maturity on the taxable corporate bond is 4.36%. Estimate what must be the equilibrium yield-to-maturity on the corresponding tax-free municipal bond so that will bear the same after-tax return? (The answer is a percent, round your...
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