Chapter 6, Problem 1P

Summary Introduction

Adequate information:

Corporate bond yield is $7.68\%$ .

The federal-plus-state-tax bracket of the investor is $25\%$ .

To compute: The bond’s after-tax yield to the investor

Introduction: One of the ways that businesses raise money is through the issuance of bonds. The yield on bonds refers to the amount of return that a bond's investor receives. There are many different forms of bond yields and the yield fluctuates along with the price.