Calculate the after-tax return of a(n) 5.625.62 percent, 20-year, A-rated corporate bond for an investor in the 1515 percent marginal tax bracket. Compare this yield to a(n) 3.683.68 percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 3535 percent marginal tax bracket.
Q: An investor recently purchased a corporate bond that yields 9%. The investor is in the 36% combined…
A: Before tax yield = 9.00% Tax rate = 36% After Tax yield = Before tax yield * (1- Tax rate)
Q: You can invest in taxable bonds that are paying a yield of 9.50 percent or a municipal bond paying a…
A: A security bond is a legally enforceable promise to pay the government if you or your employee…
Q: Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively, Curtis…
A: The objective of this question is to calculate the after-tax rate of return on the city of Athens…
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: 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: Question content area top Part 1 Calculate the after-tax return of a(n) 8.858.85 percent,…
A: The objective of this question is to calculate the after-tax return of a corporate bond and a…
Q: 2. Which of the following is a reason why zero-coupon bonds are the best way for high-income…
A: Zero coupon bonds are bonds that do not pay interest during the life of the bonds. Instead,…
Q: Question content area top Part 1 Calculate the after-tax return of a(n) 6.456.45 percent,…
A: The objective of this question is to calculate the after-tax return of a corporate bond and a…
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: An investor purchases a 30-year U.S. municipal bond for $840. The bond’s coupon rate is 10 percent…
A: We know all the cash flows associated with the bond along with the timing. We need to find the…
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: 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: Question content area top Part 1 Calculate the after-tax return of a(n) 7.947.94 percent,…
A: The objective of this question is to calculate the after-tax return of a corporate bond for an…
Q: bond
A: 1) To calculate which bond is more beneficial we have to calculate the YTM. Formula for YTM is: YTM…
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: A 10-year corporate bond has an annual coupon of 9 percent ($45 paid semi-annually) and a price of…
A: bonds can offer a range of benefits for investors looking for a stable source of income and a way to…
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: 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: You can invest in taxable bonds that are paying a yield of 9.4 percent or a municipal bond paying a…
A: A financial instrument that does not affect the ownership of the common shareholders or management…
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: 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: A 10-year corporate bond has an annual coupon of 9 percent ($45 paid semi-annually) and a price of…
A: A bond refers to an instrument that is used to raise debt capital for the issuing organization from…
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: 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: A municipal bond carries a coupon rate of 4.25% and is trading at par. What would be the equivalent…
A: A bond indicates a debt instrument that obligates the issuer to pay the par value at the expiration…
Q: Freddy’s Farm issued a 25-year, 5 percent semiannual bond three years ago. The bond currently sells…
A: Given:
Q: Biogen is currently offering a bond with a coupon of 8.55%. The municipality of Boston is currently…
A: Bonds are debt instruments issued by companies or entities like a municipal body or a government…
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 for…
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: What is Curtis's after-tax rate of return on the city of Athens bond?
A: The correct answer is 9.25 percent.
Q: Assume that an individual owns a bond that they purchased for $100,000. The bond has a 10% coupon.…
A: Bonds- A bond is a fixed-income tool that represents a loan made by a shareholder to a borrower…
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: Calculate the after - tax return of a(n) 4.75 percent, 20-year, A -rated corporate bond for an…
A: Pre-tax yield on corporate bond = 4.75%Tax bracket = 10%After-tax yield = Pre-tax yield * (1- tax…
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: 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: asury with a yield of 5.99% -state municipal bond with a yield of 4.46% in the 32% federal tax…
A: Municipal bonds are used by government to raise money from market and these bonds are tax exempted…
Q: A state issued muni bond offered at a coupon rate of 4% is preferred over a junk bond of 6% when a…
A: Municipal securities, sometimes known as "muni bond," are bonds issued by states, cities, counties,…
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: LL Incorporated’s currently outstanding 7 percent coupon bonds have a yield to maturity of 11…
A: A bond symbolizes a loan made by bondholders to the issuer, who agrees to return the principal and…
Q: 3. The after tax yield on a bond is (1- tax rate) x yield. Suppose that someone has a tax rate of…
A: After Tax Yield of bond with Taxable Interest = (1 - 0.25)*5%…
Q: jiminy's cricket farm issued a 30-year, 7 percent semiannual bond 3 years ago. the bond currently…
A: A bond pays regular equal coupons paid over the maturity of the bond along with par value at the…
Q: Suppose your marginal federal income tax rate is 25 percent. 1. What is your after-tax return from…
A: The question is to study the impact on tax rate on yield of different types of bonds, in general…
Q: An investor in the 22 percent tax bracket is trying to decide which of two bonds to select: one is a…
A: In general, the Cashflow series are the before-tax return on which tax has been deducted for…
Calculate the after-tax return of a(n)
percent, 20-year, A-rated corporate bond for an investor in the
percent marginal tax bracket. Compare this yield to a(n)
percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the
percent marginal tax bracket.
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- Calculate the after-tax return of a(n) 5.625.62 percent, 20-year, A-rated corporate bond for an investor in the 1515 percent marginal tax bracket. Compare this yield to a(n) 3.683.68 percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 3535 percent marginal tax bracket. Question content area bottom Part 1 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 1515% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 2 Compare this yield to the 3.683.68%, 20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.) A. The after dash tax yield of 4.78 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 4.78% for the corporate bond is a better…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?What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 4.1 percent for an investor in the 28 percent marginal tax bracket?
- Suppose your marginal federal income tax rate is 25 percent. 1. What is your after-tax return from holding a one-year corporate bond with a yield of 5.25 percent? (1 pt) 2. What is your after-tax return from a holding a one-year municipal bond with a yield of 4 percent? (1 pt) 3. How would you decide which bond to hold? (Assume that Both bonds carry the same risk.) (1 pt)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 %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:
- Assume your in the 28% tax bracket and purchase a municipal bond with yield of 3.10%. What is the taxable equivalent yield for this investment?Assume your in the 35% tax bracket and purchased a municipal bond with a yield of 3.60. What is the taxable equivalent yield for this investment?A client in the 33 percent marginal tax bracket is compar- ing a municipal bond that offers a 4.50 percent yield to maturity and a similar risk corporate bond that offers a 6.45 percent yield. Which bond will give the client more profit after taxes? (LG 6-2)
- 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)What is the taxable equivalent yield on a municipal bond with a yield to maturity of 4 percent for an investor in the 28 percent tax bracket?C) Suppose that the interest rate on a taxable corporate bond is 9% and that the marginal tax is 28%. Suppose a tax-free municipal bond with a rate of 6.75% was available. Which security would you choose?