问题16 1分 One more assumption to make for this question. Now assume that just before issuance of the bonds by these two entities the Congress passes a law making municipal bonds tax-free. Under these assumptions, to be able to borrow $120,000,000, the Treasury has to issue a bond with a face value of dollars and the city government has to issue a bond with a face value of dollars. The after-tax rate of return from the Treasury bond for the investors like you and me will be percent and the after-tax rate of return from the municipal bond will be percent. After one year when the bonds mature, the Treasury will pay interest to the lenders. The city government will pay to the lenders. dollars in dollars in interest
问题16 1分 One more assumption to make for this question. Now assume that just before issuance of the bonds by these two entities the Congress passes a law making municipal bonds tax-free. Under these assumptions, to be able to borrow $120,000,000, the Treasury has to issue a bond with a face value of dollars and the city government has to issue a bond with a face value of dollars. The after-tax rate of return from the Treasury bond for the investors like you and me will be percent and the after-tax rate of return from the municipal bond will be percent. After one year when the bonds mature, the Treasury will pay interest to the lenders. The city government will pay to the lenders. dollars in dollars in interest
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:问题16
1分
One more assumption to make for this question. Now assume that just before issuance of
the bonds by these two entities the Congress passes a law making municipal bonds tax-free.
Under these assumptions, to be able to borrow $120,000,000, the Treasury has to issue a
bond with a face value of
dollars and the city government has to issue a
bond with a face value of
dollars.
The after-tax rate of return from the Treasury bond for the investors like you and me will be
percent and the after-tax rate of return from the municipal bond will be
percent.
After one year when the bonds mature, the Treasury will pay
interest to the lenders. The city government will pay
to the lenders.
dollars in
dollars in interest
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