site stats

Indifferent between the bonds

Web1 feb. 2016 · To be indifferent between investing in the two bonds, the Surething, Inc. bond should provide Hugh the same after-tax rate of return as the City of Heflin bond … Web30 jan. 2024 · Answer: At tax rate 32.1%, investors be indifferent between the two bonds Explanation: Yield after tax of corporate bond = 8.1% * (1- tax rate) Investors would be indifferent between the two bonds when Yield after tax of corporate bond equals to yield of tax free municipal bonds. 8.1% * (1- tax rate) = 5.5% ⇔ 8.1% - 8.1% * tax rate = 5.5%

Solved Need help with question C (at what tax rate would he

There are four primary categories of bonds sold in the markets. However, you may also see foreign bondsissued by global corporations and governments on some platforms. 1. Corporate bondsare issued by companies. Companies issue bonds rather than seek bank loans for debt financing in many cases … Meer weergeven A bond is a fixed-income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. … Meer weergeven Bonds are debt instruments and represent loans made to the issuer. Governments (at all levels) and corporations commonly use bonds in order to borrow money. Governments need to fund roads, schools, dams, or … Meer weergeven Most bonds share some common basic characteristics including: 1. Face value(par value) is the money amount the bond will be worth at maturity; it is also the reference amount the bond issuer uses when … Meer weergeven Bonds are commonly referred to as fixed-income securities and are one of the main asset classes that individual investors are usually familiar with, along with stocks (equities) and cash equivalents. When companies or … Meer weergeven WebTo make Gwen indifferent between the two bonds, the corporate bond must offer an interest rate of 8.96% Harper just got a big raise at work, which pushed her from the 15% … dr safier youngstown https://2inventiveproductions.com

Answered: Suppose that, holding yield constant,… bartleby

Web25 dec. 2024 · Answer: a. Post-tax interest rate on taxable bonds issued by the Coca-Cola Company =100%-22% =10*78%= 7.80 Dennis will choose Taxable bonds because it gives higher post-tax interest rate of 7.80% as against 7.50% on municipal bonds. b. Post-tax interest rate on taxable bonds issued by the Coca-Cola Company =100%-32% … WebAt what tax rate would you be indifferent between the two bonds? A taxable bond has a yield of 8% and a municipal bond has a yield of 6%. If you are in a 40% tax bracket, which bond do you prefer? At what tax rate would you be indifferent between the two bonds? Expert Answer Taxable bond : After tax cost of debt = 8%* (1-0.40) = 4.80% Munici … Web23 feb. 2024 · While municipal bonds are free of federal taxes, some states do tax the earnings. The liquidity of municipal bonds may also be limited. Tax-Equivalent Yield Formula Depending on an investor's... colonial apartments champaign il

Solved A taxable bond has a yield of 8% and a municipal bond

Category:Solved A 5-year corporate bond yields 10.70%. A 5-year - Chegg

Tags:Indifferent between the bonds

Indifferent between the bonds

A corporate bond currently yields 8.10%. Municipal bonds with …

Web31 mei 2024 · Insurers should be indifferent between the two instruments in a perfect capital market. However, the theoretical literature suggests that insured risk characteristics and market imperfections may influence the effectiveness and efficiency of reinsurance relative to CAT bonds. WebStudy with Quizlet and memorize flashcards containing terms like An investor recently purchased a corporate bond that yields 9%. The investor is in the 36% combined federal …

Indifferent between the bonds

Did you know?

WebDennis would be indifferent between the two bonds if his marginal tax rate is 25 percent. After-tax return = Pretax return × (1 − Marginal tax rate) 9.75 percent = 13.0 percent × (1 … Web5. In a recent year, interest rates on long-term government and corporate bonds were as follows: T-bond = 7.72% A = 9.64% AAA = 8.72% BBB = 10.18% The differences in …

WebBusiness Finance Suppose that, holding yield constant, investors are indifferent as to whether they hold bonds issued by the federal government or bonds issued by state and local govemments (that is, they consider the bonds the same with respect to default risk, information costs, and liquidity). WebThe yield for a comparable taxable corporate bond was 3.93 percent. Thus, taxpayers whose federal tax rate is about 10 percent should be just indifferent between the two types of bonds (the gap in yields—0.4 percentage points—is about …

WebQuestion: A 5-year corporate bond yields 10.70%. A 5-year municipal bond of equal risk yields 6.50%. Assume that the state tax rate is zero. At what federal tax rate are you … WebPMT=? ($23,739.64) The Shrieves Corp. has $10,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds, which yield 7.5%, state of Florida mini bonds, which yield 5%, and AT&T preferred stock, with a dividend yield of 6%. Shrieves's corporate tax rate is 35%, and 70% of the dividends received are tax exempt.

WebA: Bonds are long-term debt instruments by which companies raise funds. They require a fixed interest… Q: Suppose you invest in a municipal bond that pays a yield of 149%. If your marginal tax is 15%, what… A: A municipal bond is a government debt security issued to raise long-term debt funds. The yield…

Web6 mrt. 2024 · When you buy a bond, you lend money to that entity with the promise that it will pay you back with interest. The interest usually takes the form of payments that are a percentage of the amount you loaned. When the bonds mature, you receive your money back. There are tax-free and taxable bond types that you can choose from. Note dr safman huntington beachWeb1 jun. 2012 · Tax equivalent yield (TEY) is the tool used to compare tax-free munis to taxable bonds. Most munis are tax-exempt on the federal and state levels, which sounds … colonial apartments charleston scWeba payment required by the government that is u related to any specific benefit or service received from the government earmarked tax tax assessed for a specific purpose tax base what is actually taxed and is usually expressed in monetary terms tax rate determines the level of taxes imposed on the tax base and is usually expressed as a percentage. dr safoora choudryWebTo be indifferent between investing in the two bonds, the Surething, Inc. bond should provide Hugh the same after-tax rate of return as the City of Heflin bond (5.25 percent). To solve for the required pretax rate of return we can use the following formula: After-tax return = Pretax return × (1 − Marginal tax rate). dr safirstein mountain lakes njWeb3 apr. 2024 · The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. The performance mentioned does not include fees and charges, which would reduce an investor’s returns. dr safley cardiologyWeb14 apr. 2024 · Learn about Arthur Koestler's Darkness at Noon. Explore the summary, review the characters, study the analysis, and understand the novel's themes... dr saftawi bad bentheimWebShare free summaries, lecture notes, exam prep and more!! colonial apartments for rent