After-tax yield: Municipal vs. Corporate Bonds
Not what you're looking for?
Corporate bonds issued by Johnson Healthcare currently yield 8 percent.
a. If an investor is in the 34 percent tax bracket, what is the bond's after-tax yield?
b. Municipal bonds of equal risk currently yield 6 percent. At what tax rate would an investor be indifferent between these two bonds?
c. Which bond should an investor in the 34 percent tax bracket invest in?
Purchase this Solution
Solution Summary
This solution provides calculations for after-tax yield and tax rates.
Solution Preview
Question A
After-tax yield = Yield*(1-tax rate) =8%*(1-34%) = 5.28%
Question B
Indifference rate level = Municipal bond ...
Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.