Question

Q4: What's the taxable equivalent yield on a municipal bond with a yield to maturity of 4.25 % for an investor in the 28% marginal tax bracket? (3 Points) Q5: A 5.25% coupon bond with 14 years left to maturity one year of coupon payments. It is offered for sale at $1,075.50. What is the yield to call (YTC) of the bond? (3 points) can be called in 4 years. The call premium is

Answer 1

X New Microsoft Office Excel Worksheet Microsoft Excel Home Insert Page Layout Formulas Data Review View Y A Cut E AutoSum- = = = A A Calibri 11 Wrap Text General Copy Fill Conditional Format Formatting Insert Delete Formal Paste Cell Sort & Find & S BIU Merge & Center % Format Painter Clear s Table Styles Filter Select Alignment Cells Clipboard Font Number Styles Editing taxable equivalent Yleld on municiple bonds G1521 N R T H K M O 1519 1520 taxable equivalent YTM on Teld on municiple 5.90% ax rate) 4.25%/(1-28) 1521 1 rate(nper,pmt,pv fv,type) nper 4 Yield to call Using rate function in MS excel pmt 52.5 pv RATE 4, 52.5.1075.5.- 1075.5 fy 1522 2 1052.5 type -0 1052.5.0) 4 38 % 1525 1526 1527 1528 1531 1532 1533 1534 1535 1536 Sheet16 Sheet17 Sheet18 Sheet19 Sheet20 Sheet21Sheet22 Sheet23 Sheet24 Sheet25 Count: 8Sum: 0.102834697 90 % Ready Circular References Average: 0.051417349 7:19 AM R 6/7/2019

taxable equivalent Yield on municipal bonds	YTM on municipal bond/(1-tax rate)	4.25%/(1-.28)	5.90%
Yield to call = Using rate function in MS excel	rate(nper,pmt,pv,fv,type) nper = 4 pmt = 52.5 pv =-1075.5 fv = 1052.5 type =0	RATE(4,-52.5,1075.5,-1052.5,0)	4.38%