Consider the decision to purchase either a five year corporate bond or a five year municipal bond. The corporate bond has a 13% annual coupon with a par value of $1000 with a current yield of 11%. The municipal bond has 11% annual coupon and a par value of $1000 that is currently yielding at 9%. Which of the two bond will be more beneficial to you. Assume that your marginal tax rate is 30%.

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: A 3.70 percent coupon municipal bond has 15 years left to maturity and has a price quote of 95.65.…

A: Bonds refer to the financial instruments issued by banks or financial institutions at a specified…

Q: Monster Limos plans to issue new bonds that have the same yield as its existing bonds, which have a…

A: Yield to maturity (YTM) If coupon is paid semiannually, then semiannual YTM, considering total…

Q: An investment firm recommends that a client invest in bonds rated AAA, A, and B. The average yield…

A: Bonds are debt instruments issued by companies. The issuing company pays periodic coupons or…

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: You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it…

A:

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 3.20 percent coupon municipal bond has 10 years left to maturity and has a price quote of 96.45.…

A: Par value$5,000.00Coupon rate3.20%Years to maturity10Price quote96.45%Compounding frequency2Years to…

Q: Suppose your company needs to raise $40.7 million and you want to issue 20-year bonds for this…

A: Bond are financial instrument, issued to raise funds from the outside market that represent a loan…

Q: For tax purposes, the implicit annual interest for any one year on a zero coupon bond is equal to…

A: A zero-coupon bond is a bond that does not pay interest on an annual or periodic basis. It is the…

Q: bond

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

Q: A municipal bond with a coupon rate of 2.7 percent has a yield to maturity of 3.9 percent. If the…

A: Bond is a debt security that is issued by organizations to raise debt funds from public and…

Q: A corporation issues a bond that promises to pay you monthly coupons in the amount of $ 77.5 per…

A: Bond price refers to the market value at which a bond is traded. It represents the present value of…

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: 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: 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: 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: 1. A municipal bond has a coupon rate of 5.83 percent and a YTM of 5.53 percent. If an investor has…

A: The yield at which a pretax bond is equal to a tax-free bond is equivalent to a pretax yield. This…

Q: One year ago you bought a $10,000, 4-year Government of Canada Treasury Bill (discount bond) at the…

A: Solution:- The current market price of a bill means the price at which a bill is trading in the…

Q: Problem 1: An investor purchases one municipal and one corporate bond that pay rates of return of 8%…

A:

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: a. How many of the coupon bonds would you need to issue to raise the $24 million? How many of the…

A: Bond is a fixed income instrument that represents a loan made by investor to the borrower.A zero…

Q: Suppose your company needs to raise $41.3 million and you want to issue 20-year bonds for this…

A: Bond are financial instrument, issued to raise funds from the outside market that represent a loan…

Q: ake Baldwin is looking for a fixed-income investment. He is considering two bond issues: A Treasury…

A: We need to compute tax adjusted yield for both the bonds

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: A municipal bond has a coupon rate of 5.83 percent and ytm of 5.53 percent.  If an investor has a…

A: Solution:- Equivalent pretax yield on a taxable bond means the yield on taxable bond at which its…

Q: If a 5 yr. AA- General Dynamics note is yielding a 35% tax bracket investor 7.56125% while a…

A: Tax equivalent yield is used to determine the yield from a municipal bond or a note.

Q: What is the tex-equivalent interest rate needed if you purchase a municipal bond wiht a face value…

A: Municipal bonds are bonds issued by state or local governments. They are generally tax exempt.

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: help

A:

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.