Question

1. Jennifer is in the 25% federal income tax bracket and the 3% state income tax bracket. If Jennifer purchases a municipal bond yielding 4.25%, what is her after-tax equivalent yield if the bond income is exempt from both federal and state taxes?

• 5.84%

• 5%

• 7.55%

8. A bond has a YTM of 6.5%, a modified duration of 16.9 years, a duration of 18 years and a 30 year maturity. By what percentage will the bond's price change if market interest rates increase by 0.75%?

• 7.213

• -7.213

• -12.675

• 12.675

9. Yield to call on a bond with a coupon rate of 8% paid semi-annually, 10 years to maturity, a par value of $1,000 and a selling price of $1,071, callable after 5 years at $1,010

• 6.49%

• 7.32%

10. That is the current price of a 9%, $1,000 annual coupon bond that has eighteen years to maturity and a yield to maturity of 9.631%?

• $947

• 899

please show work

Answer 1

Given data, federal tare gate - 2 5% State acome tax Tate 2 37 after a yield 425ン。 after b yilld Tur equi valent lbond 1 federal tar ate -State tar ate) (1-0-25-003) 25 -72 = ち90ン Option 5.90ン near to Optionicenseit

percentrge of Chavge Rn bond price modified duation g change i -ve Paterest aate 16-9 0.757 ve 2 675 Option 3 îs coect yei ld to call = Interest +Ca price- Cworent sale Call year Call prce-fcurendt Sule paice 20 (101o-lo ol0+101 2 So122 G7.8

(3) O.06S 6.s option s near to option 649 Cosxeit price cf a bondooo x PVIF9631%,184ears H000 xapFA(96s% ,184e- PVIF (4.631 price af a bond 191-1t96x 8.3192 9l t75S :928 q47 02 -qu7 opfion i coxect