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%

Q: If 15-year T-bonds have a yield of 6%, 15-year corporate bonds yield 8%, the maturity risk premium…

A: Corporate Bond Yield refers to the risk attached with the particular bond above the T bill yield,…

Q: A treasurer is deciding between a taxable security and a tax-exempt security.  The company's…

A: The taxable equivalent yield is the required return for an investor on order to equal the tax free…

Q: Bond interest payments before and after taxes Charter Corp. has issued 2,408 debentures with a total…

A: The interest rate on the debenture is calculated on the face value.  The company gets a tax benefit…

Q: Consider the following three bond quotes: a Treasury note quoted at 95.84, a corporate bond quoted…

A: Quote is the percentage expression showing the price as a percentage of the face or par value. For…

Q: Municipal bonds are yielding 4.4 percent if they are insured and 4.7 percent if they are uninsured.…

A: Bonds are the debt security which is offered or issued by the corporates or the governments to…

Q: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds…

A: Cost of debt refers to the overall weighted cost of debt of all the bonds to the company.

Q: 3. Jones Cricket Institute issued a 30 year, 8 percent semi-annual bond 3 year ago. The bond…

A: Solution- (a) the pre-taxed cost of debt is its yield to maturity (YTM)  Assume that Face value or…

Q: the 32% marginal tax bracket, this bond would offer an equivalent taxable yield of O 1) 8.25%. 2)…

A: Municipal yield = 8.75%Tax rate = 32%

Q: A municipal bond's yield to maturity is 7.78%. What is the taxable equivalent corporate bond yield…

A:

Q: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds…

A: Bonds are debt securities issued by governments and private companies to raise funds from the…

Q: You are in the 30% tax bracket (federal & state taxes combined). A corporate bond is yielding 9%.…

A: Municipal bonds are provided by the government and are tax free in nature and these are provided to…

Q: ear ago, you have short-sold 4000 shares of Stock Z, which was trading at $150 per share. After a…

A: A short position would be at loss if price rises.

Q: Bond interest payments before and after taxes Charter Corp. has issued 1,719 debentures with a total…

A: The interest rate on the debenture is calculated on the face value.  The company gets a tax benefit…

Q: bond

A: 1) To calculate which bond is more beneficial we have to calculate the YTM. Formula for YTM is: YTM…

Q: Bond interest payments before and after taxes Charter Corp. has issued 2,500 debentures with a total…

A: When a company needs to acquire funds from outside sources it has to seek either the issuance of…

Q: 17) Debt issued by Southeastern Corporation currently yields 10%. A municipal bond of equal risk…

A: A bond is a debt instrument that is used by various institutions for raising capital. It is…

Q: Question 15 A corporate bond pays 8.7 percent interest. You are in the 30 percent tax bracket. What…

A: According to bartleby guidelines , if multiple questions are asked , then 1st question needs to be…

Q: Madoff Corporation raised money through a bond issue with a total principal value of $3,000,000.…

A: Bonds are liabilities to be repaid in the future. They are issued for the purpose of raising finance…

Q: efore and after-tax cost of debt For the following $1,000-par-value bond paying semi-annual interest…

A: The bonds are the long term sources of finance for the companies. Bond are paid periodic interest…

Q: Kelly Phillips, an investor who resides in Livingston NJ, has a marginal tax rate of 28%. If a NJ…

A: Yield to maturity = 5.53%  Marginal Tax = 28%

Q: Suppose a municipal bond offers a 4% rate of interest. A corporate bond comes with a 6% coupon but…

A: In order to meet the capital expenditure like construction of building for the public, highways, etc…

Q: A municipal bond has a YTM of 4.11 percent while the YTM of a comparable taxable bond is 6.16…

A: The municipal bonds are tax-free bonds. The tax equivalent yield can be calculated using the…

Q: A corporate bond that you own at the beginning of the year is worth $975. During the year, it pays…

A: Value at beginning (VB) = $975 Value at end (VE) = $965 Interest payment (I) = $35   Dollar return =…

Q: If the municipal bond rate is 6% and the corporate bond rate is 8%, what is the marginal tax rate,…

A: The taxable equivalent yield is 8% in this scenario whereas tax free yield is 6%. We need to find…

Q: Ying Import has several bond issues outstanding, each making semiannual Interest payments. The bonds…

A: Yield to maturity is the rate of return that the bondholders will get if they invest and bond and…

Q: An LGU bond offers a yield of 8.5%. What rate should a corporation offer on its bond so investors…

A: Bonds are the liabilities of the company which is issued to raise the funds required to finance the…

Q: Determinants of Interest Rate for Individual Securities You are considering an investment in 30-year…

A: Inflation premium is computed as nominal interest rate less real interest rate. For nominal interest…

Q: 5) A 10-year municipal bond yields 4.8%. Your marginal tax rate (including state and federal taxes)…

A: After-tax return is the earnings on an investment or asset after accounting for taxes paid on those…

Q: Compute for the approximate after tax-cost of debt.

A: Part-1   The after-tax cost of debt is the interest paid on debt less any tax savings due to claim…

Q: A bond selling to yield 12.6% for the purchaser of the bond. The borrowing firm faces a tax rate of…

A: Given details are : Yield to bond holder = 12.6% Tax rate = 34% = 0.34 We need to compute the after…

Q: (A) a Bank-backed municipal bond has yield of 10% with maturity of 18 years. Calculate its Yield…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Assume that Larry's marginal tax rate is 25%. If corporate bonds pay 7.4% interest, what interest…

A: We must compare the after-tax return on the corporate bond to the pre-tax return on the municipal…

Q: You live in a world with a flat 21% taxes on all income except for the interest on municip…

A: Municipal bond is issued by government and these bonds are risk free and tax exempted and used by…

Q: Consider an investor who is in a 30% combined federal plus state tax bracket.  If a corporate bond…

A: Tax Rate = t = 30%Yield on Corporate Bond = r = 5%

Q: tax-free municipal bond provides a yield of 4.3%. What is the equivalent taxable bond given a 35%…

A: The bond are the type of investment that provides fixed return to the bond holders as a result of…

Q: Assume a municipal bond has a yield of 5.75% and corporate bond of comparable maturity and credit…

A: After tax Yield on Municipal Bond = Before Tax Yield on Municipal Bond After tax Yield on Municipal…

Q: If current Corporate Bond Rates are 4% and Municipal Bond Rates are 3%, at what marginal tax rate…

A: Corporate bond rate = 4% Municipal bond rate = 3%   Equivalent yield is the yield on a taxable…

Q: A bond issued by the Irbid Municipal is priced to yield 7.80%. If you are in the 15% tax bracket his…

A: Tax Equivalent Yield = Tax free municipal yield / (1 -tax rate)

Q: Required: Find the equivalent taxable yield of the municipal bond for tax brackets of zero, 10%,…

A: Municipal bonds are tax free bonds.Equivalent taxable yield = Yield on municipal bonds / ( 1- tax…

Q: onsider the following three bond quotes: a Treasury bond quoted at 106.438, a corporate bond quoted…

A: Par value is the value of bond that is to be paid on maturity of bond and price of bond is the value…

Q: A corporate bond matures in five years. This bond’s credit spread over comparable maturity Treasury…

A: The cost of debt of a firm can also be calculated by adding the risk-free rate of return and credit…

Q: The current yield on a municipal bons is 6%. What would the equivalent taxable yield of this bond…

A: Yield on municipal bond is tax free. But yield on corporate bond is taxable. Given: Yield on…

Q: Determinants of Interest Rate for Individual Securities You are considering an investment in 30-year…

A: Inflation premium can be calculated by subtracting real interest rate from the T bill  rate. It is…

Q: Calculate the accrued interest (in $) and the total purchase price (in $) of the bond purchase.…

A: given  coupon rate = 9.4%

Q: A municipal bond has a yield to maturity of 3.8 percent. What corporate bond yield would make  an…

A: Yield on Municipal Bond should be equal to corporate bond yield * (1-tax rate), for indifference…

Q: Consider the following three bond quotes: a Treasury note quoted at 98.84, a corporate bond quoted…

A: Bonds are debt instruments issued by entities like companies and government entities like…