a. (5 points) How much must a fully taxable bond yield to be comparable to a...

Question

Question

a. (5 points) How much must a fully taxable bond yield to be comparable to a 9% muni bond if your marginal tax rate is 29% as

business finance

Answer 1

Answer #1

1.
=yield on municipal bond/(1-tax rate)
=9%/(1-29%)
=12.6761%

2.
If price=par, yield=coupon rate=12%

Answer 2

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