Question 3- Taxable Equivalent Yield Jack & Jill are a young married couple residing in Connecticut. Their Federal marginal tax rate is 22.0%; their Connecticut state marginal tax rate is 5.5%. A few days ago, University of Connecticut offered a 20-year bond issue with an annual coupon of 3.23%. Jack & Jill intend to buy the bond at par value and hold to maturity. [BTW...UCONN bonds are Connecticut G.O.sl] A. Ignoring state income tax, calculate Jack & Jill's "taxable equivalent yield" on the UCONN bond. Show all calculations. B. Including both Federal & Connecticut income taxes, calculate taxable equivalent yield. (HINT: see Equation 10.2, page 405 of your textbook.) Show all calculations.

Question 3- Taxable Equivalent Yield Jack & Jill are a young married couple residing in Connecticut. Their Federal marginal tax rate is 22.0%; their Connecticut state marginal tax rate is 5.5%. A few days ago, University of Connecticut offered a 20-year bond issue with an annual coupon of 3.23%. Jack & Jill intend to buy the bond at par value and hold to maturity. [BTW...UCONN bonds are Connecticut G.O.sl] A. Ignoring state income tax, calculate Jack & Jill's "taxable equivalent yield" on the UCONN bond. Show all calculations. B. Including both Federal & Connecticut income taxes, calculate taxable equivalent yield. (HINT: see Equation 10.2, page 405 of your textbook.) Show all calculations.

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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E4 listen Your grandmother just gave you various bonds as follows: Two zero-coupon government bonds that each have a $1,000 face value with 10 years left to maturity and a 5% required rate of return (YTM). Three corporate bonds that each have a $1,000 face value and a 5% coupon rate per year that is paid semi-annually. The corporate bonds have 10 years left to maturity and a 14% per year required rate of retum (YTM), What is the value of one of the described corporate bonds?
7A-12 For a face value of $1,000, a zero-coupon bond maturates in 15 years. It has a 7% coupon, so I should be able to cash it in by the time I'm 70. pay in the first year For argument's sake, assume the taxpayer has a 25% effective tax rate a. $5.25b. $5.44c. $5.99d. $6.25e. $6.34
Question 9 Mr. Dover is purchasing a government strip bond with a face value of $5,000 and 30 years until maturity If the price of the bond is $924.06, what is its nominal yield? Note: Please make sure your answer are in porcentage form and are Accurate to 3 decimal places.
QUESTION FIVE You have enough money to buy 100, $1,000, 5 year, 8% government bonds that pay interest semi-annually for a price of $954 per bond. You can get 8.5% a year if you deposit your funds for 5 years with a major bank. What should you do? What is the YTM of the bond?
vv.3
A U.S. Treasury bond pays 7.6 percent interest. You are in the 22 percent tax bracket. 5.93 is the after tax-yield on this bond. If you face a 22% marginal tax rate, what is your after-tax return on each of the following bonds? A 8.6% coupon semiannual corporate bond with 7 years to maturity, currently selling for $950. Don't round steps. 2 decimal answer. _% A 5.8% coupon semiannual corporate bond with 6 years to maturity, currently selling for $1,015. Don't round steps, 2 decimal answer. _% A 4.8% coupon semiannual municipal bond with 11 years to maturity, currently selling for $1,016. Don't round steps. 2 decimal answer. _%
19
QUESTION TWO A large Bahraini company issued BD10,000, 10%, 10-year bonds that paid interest semi- annually. You bought the bonds for BD9,000 per bond. What was your yield to maturity? (Be careful.) What is the company's after tax cost of debt if the corporate tax rate is 30%?
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