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:

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: Suppose the state of Indiana issued a tax-exempt bond to pay for student fees in its universities.…

A: The tax-equivalent yield, also known as the After-tax yield, is used to establish if an investment…

Q: A corporate bond pays 9.75% interest. You are in the 29 percent tax bracket. What is your after-tax…

A: In this question we need to compute the after tax yield on the bond. Yield on bond = 9.75% Tax rate…

Q: You expect your marginal tax rate to change from 0.25 to 0.194 when you consider investing in…

A: Municipal bonds are considered tax free in nature because the interest payable on municipal bonds…

Q: 1. The 11% coupon bond of the company has a yield to maturity of 8.4%, and its standard tax rate is…

A: Step 1To calculate the before-tax and after-tax cost of bonds, you'll need to consider the coupon…

Q: 22. An investor in the 30% tax bracket is evaluating two bonds for investment: a corporate bond with…

A: 24The invoice price is the clean price plus the accrued interest.Accrued interest = (Coupon rate /…

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: 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: A client in the 33 percent marginal tax bracket is compar- ing a municipal bond that offers a 4.50…

A: Municipal bonds are tax free bonds. It means municipal bonds does not attracts tax. Hence after tax…

Q: If a taxpayer's marginal tax rate is 33 percent, what is the after-tax yield on a corporate bond…

A: Marginal tax rate = 33% Before tax interest on corporate bond = 5%

Q: An investor is trying to decide between a muni paying 6.20 percent or an equivalent taxable…

A: The objective of this question is to find out the minimum marginal tax rate at which an investor…

Q: A (general obligation) muni bond pays 7% interest. A Treasury bond pays 6.5% interest. Which bond…

A: When deciding between a municipal bond (muni bond) and a Treasury bond based on their interest…

Q: If a corporation has an average tax rate of 40 percent, the approximate annual, after-tax cost of…

A: After tax cost of debt is the cost which the bondholder expects after adjusting for taxes.

Q: If the municipal bond rate is 6% and the corporate bond rate is 7%, what is the marginal tax rate,…

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

Q: You are advising a high income client and speaking on the advantages of investing in Municipal…

A: When investing in municipal bonds, one of the advantages is that the interest income is typically…

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: What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 4.1 percent for…

A: The formula to compute equivalent taxable yield is as follows:

Q: Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to…

A: Tax-free Yield = 10.00% = 0.10Tax Rate = 35% =  0.35

Q: A municipal bond you are considering as an investment currently pays a yield of 6.86 percent. a.…

A: The tax-equivalent yield is the rate of return necessary for a taxable bond to match the yield of a…

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: David Co has in issue 4% irredeemable debt quoted at $155 (ex- interest). The corporation tax rate…

A: Cost of Capital is the minimum rate of return at which the company makes an adequate investment to…

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: Calculate the​ after-tax return of​ a(n) 5.625.62 ​percent, 20-year,​ A-rated corporate bond for an…

A: The objective of this question is to calculate the after-tax return of a corporate bond and a…

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: Assume your in the 35% tax bracket and purchased a municipal bond with a yield of 3.60. What is the…

A: Taxable equivalent yield is the return on taxable investment which is equal to the tax-exempt…

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

A: After tax yield on any investment is the total rate of return that is generated after accounting for…

Q: Assume you are in the 35 percent tax bracket and purchase a municipal bond with a yield of 5.75…

A: Municipal bond yield = 5.75%tax rate = 35%Taxable equivalent yield =?

Q: An investor is in the 28% tax bracket. A corporate bond has a before-tax yield of 8%. What is the…

A: Given details are : Before tax yield = 8% Tax rate = 28% = 0.28 We need to compute the equivalent…

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: Simple Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon rate of 3.6% and…

A: Here, Maturity = 10.5 years Coupon rate = 3.6% Yield to maturity = 5.4% Average tax rate = 18%…

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: A Corporation believes that it can sell long term-bonds with an 8% coupon rate, although the…

A: Corporate bond kind of debt issued by profit-generating organizations. These bonds are risky, unlike…

Q: Suppose you are a wealthy individual paying 35% tax on income. What is the expected after-tax yield…

A: Yield refers to the returns that an investor earns by holding a fixed-income security till maturity,…

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: 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: Bond A is a municipal bond and Bond B is a corporate bond. If you pay a very high tax rate, which…

A: Investors often include bonds in their portfolios as a means of generating income, diversifying…

Q: Which is the better return for the investor on an after-tax basis? Please answer either corporate or…

A: Corporate bonds are taxable but Municipal bonds are not.Corporate bonds are currently yielding…

Q: Suppose the interest rate on a taxable corporate bond is 4 percent while a municipal, tax exempt…

A: Step 1 Bonds are used for borrowing money by the corporates or state governments or municipalities…

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: 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: An investor is trying to decide between a muni paying 6.20 percent or an equivalent taxable…

A: A municipal bond is a type of bond issued by a state or local government to finance public…

Q: ultiple Choice 5.56 percent 3.87 percent

A: In this we have to find out the taxable equivalent interest rate.