CONNECT WITH LEARNSMART FOR BODIE: ESSE
11th Edition
ISBN: 9781265046392
Author: Bodie
Publisher: MCG
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Textbook Question
Chapter 2, Problem 13PS
A municipal bond carries a coupon rate of 4.25% and is trading at par. What would be the equivalent taxable yield of this bond to a taxpayer in a 35% combined tax bracket? (LO 2-1)
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A municipal bond carries a coupon rate of 4.25% and is trading at par. What would be the equivalent taxable yield of this bond to a taxpayer in a 35% combined tax bracket? (Round your answer to 2 decimal places.)
Suppose you invest in a municipal bond that pays a yield of 9%. If your marginal tax is 29%, what is the equivalent yield on the taxable bond? (write your answer in percentage and round
it to 2 decimal places)
b) You can invest in taxable bonds that are paying a yield of 9.50% or a municipal bond paying
a yield of 7.75%. If your marginal tax rate is 21%, which security bond should you buy?
Answer:
Chapter 2 Solutions
CONNECT WITH LEARNSMART FOR BODIE: ESSE
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- The current yield on a municipal bons is 6%. What would the equivalent taxable yield of this bond to a taxpayer in a 35% tax bracket? Enter your answer as a decimal not percentage and round your answer to 4 decimal placesarrow_forwardA bond issued by the New York state is priced to yield 6.30 % . If you are in the 25 % tax bracket this bond would provide you with an equivalent taxable yield ofarrow_forwardA tax-free municipal bond provides a yield of 4.3%. What is the equivalent taxable bond given a 35% tax bracket? 4.3% 5.4% 6.6% 2.8%arrow_forward
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