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
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