Municipal bond offers YTM 5.7%, where as corporate bond offers 5% yield. both has the same maturity. for which values of marginal tax rate would an investor prefer to buy the corporate bond? A) -25% B) -19% C) -15% D) -14%
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- A 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%A municipal bond's yield to maturity is 7.78%. What is the taxable equivalent corporate bond yield using a 21% tax rate? 9.85% 6.15% 6.37% ○ 9.41%Assume a municipal bond has a yield of 5.75% and corporate bond of comparable maturity and credit rating has a yield of 7%. For each marginal tax rate below calculate the after tax yield for the municipal bond and the corporate bond Type your answer below as a percentage (not decimals) 10% Muni: Corporate: * 20% Muni:! Corporate: Corporate 25% Muni: Muni:| Corporate: · 30%
- Assume a municipal bond has a yield of 5.75% and corporate bond of comparable maturity and credit rating has a yield of 7%. For each marginal tax rate below calculate the after tax yield for the municipal bond and the corporate bond. Type your answer below as a percentage (not decimals): • 10% Muni: Corporate: • 20% Muni: Corporate: • 25% Muni: Corporate: • 30% Muni: Corporate:1. A bond issued by the Irbid Municipal priced to yield 7.80%. If you are in the 15% tax bracket this bond would provide you with an equivalent taxable yield of 8.41% 7.80% 9.17% 8.99%You can invest in taxable bonds that are paying a yield of 9.7 percent or a municipal bond paying a yield of 7.95 percent. Assume your marginal tax rate is 21 percent. a. Calculate the after-tax rate of return on the taxable bond? (Round your answer to 2 decimal places. (e.g., 32.16))b. Which security bond should you buy?
- You can invest in taxable bonds that are paying a yield of 9.4 percent or a municipal bond paying a yield of 7.65 percent. Assume your marginal tax rate is 21 percent. a. Calculate the after-tax rate of return on the taxable bond? (Round your answer to 2 decimal places. (e.g., 32.16)) b. Which security bond should you buy? a b. Rate of return The security bond one should buy is %A (general obligation) muni bond pays 7% interest. A Treasury bond pays 6.5% interest. Which bond would you rather own if your marginal tax rate on interest payments is 18%?A bond issued by the State of Pennsylvania provides a 5.75% yield. What yield on a Synthetic Chemical Company bond would cause the two bonds to provide the same after-tax rate of return to an investor in the 35.00% tax bracket? (Round your final answer to two decimal places.) O a. 3.74% O b. 7.76% O c. 8.85% O d. 4.26% O e. 16.43%
- 1. A municipal bond has a coupon rate of 5.83 percent and a YTM of 5.53 percent. If an investor has a marginal tax rate of 28 percent, what is the equivalent pretax yield on a taxable bond? IF RELEVANT SHOW CALCULATOR STEPSShort-term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%. Which gives you the higher after-tax yield if your tax bracket is:a. Zerob. 10%c. 20%d. 30%Suppose that short-term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%. Required: Which gives you the higher after-tax yield if your combined tax bracket is: Higher After-Tax Yield a. Zero Municipal bond b. 10% Taxable bond c. 20% Municipal bond d. 30% Neither