An investor is in a 35% combined federal plus state tax bracket. If corporate bonds offer...
An investor is in a 35% combined federal plus state tax bracket.
If corporate bonds offer 9.50% yields, what yield must municipals
offer for the investor to prefer them to corporate bonds?
(Round your answer to 2 decimal places.)
Minimum municipals offer: ____%
Homework Answers
Minimum municipals offer=corporate bonds yield*(1-tax rate)
=9.5*(1-0.35)
which is equal to
=6.18%(Approx).
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