mpare bond a is giving you 10 % return and municipal bond b is giving you 8 % return . your marginal tax rate is 30% whixh one you will choose . if 2 choose has
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compare bond a is giving you 10 % return and municipal bond b is giving you 8 % return . your marginal tax rate is 30% whixh one you will choose . if 2 choose has the same risk ?
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- If you buy municipal bond (tax free) that cost $1,000 and will pay a 4.7% coupon every year for the next 10 years (so the maturity date is in 10 years). At maturity the bond returns the original $1,000. If there is a 2.5% annual inflation, a) what real rate of return will you receive? b) How much real $ profit did you make from the bond?An investor in the 22 percent tax bracket is trying to decide which of two bonds to select: one is a 5.5 percent U.S. Treasury bond selling at par; the other is a municipal bond with a 4.25 percent coupon, which is also selling at par. Which of these two bonds should the investor select? Why?You are trying to decide between a par value corporate bond carrying a coupon rate of 6.25% per year and a par value municipal bond that pays an annual coupon rate of 4.75%. Assuming all other factors are the same and you are in the 28% tax bracket, which bond should you choose and why?
- What is the tex-equivalent interest rate needed if you purchase a municipal bond wiht a face value of %5000, a coupon rate of 4%, and a maturity date of 7 years? Assume you are in the 30% marginal federal tex bracket. 5.71% 3.30% 5.41% 7.21%An investor has $633,000 to invest in bonds. Bond A yields an average of 8% and the bond B yields 5%. The investor requires that at least 3 times as much money be invested in bond A as in bond B. You must invest in these bonds to maximize his return. This can be set up as a linear programming problem. Introduce the decision variables: ?=dollars invested in bond A ?=dollars invested in bond B Compute ?+? $ ________. Round to the nearest cent.Your good friend is looking to buy a bond that pays semi-annual interest. The par value is $1,000 and the coupon rate is 4%. Your friend plans to hold the bond to its maturity, which is 10 years from now. If her required rate of return is 3%, what is the most you recommend your friend pay for the bond? (round to nearest cent). Will use please show me how to do this using the PV function Is it a -PV. Thanks, C
- You have $100,000 to invest. You choose to put $150,000 into the market by borrowing $50,000. a. If the risk-free interest rate is 3% and the market expected return is 10% what is the expected return of your investment? b. If the market volatility is 18%, what is the volatility of your investment?Assume that the dividend payout ratio will be 55 percent when the rate on long-term government bonds falls to 9 percent. Because investors are becoming more risk averse, the equity risk premium will rise to 8 percent and investors will require a 7 percent return. The return on equity will be 13 percent. What is your expectation of the market P/E ratio?One year ago you bought a $10,000, 4-year Government of Canada Treasury Bill (discount bond) at the then market yield of 5%. Today the market yield on the bond is 3% and now you find that must sell the bill. (a ) What is the current market price of the bill? (b ) What is your one period holding period return on your investment?
- Suppose that you buy a two-year 8% bond at its face value.(a) What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second? What will be your total real return? (b) Now suppose that the bond is a TIPS. What will be your total two-year real and nominal returns?Use a different graph for each one and clearly label the axis and the shifting of curves. Explain clearly (in words and on the graph) whether the price and yield to maturity increased or decreased. You buy a bond that pays annual interest payments of 8% of the bond’s face value of $1000. You initially pay $1050 for the bond. You receive an annual interest payment after one year, then sell the bond for $1010. What is your total rate of return on the investment, expressed as a percentage of the purchase price?Last year you purchased a 15-year bond at 98 with a coupon rate of 5%. The current market rate is 3%. If you sold your bond today, what would be your total return on your investment (ignore taxes)?
