1 a municipal bond has a yield to maturity of 38 percent, Ask an Expert

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1. A municipal bond has a yield to maturity of 3.8 percent. What corporate bond yield would make an investor in the 30 percent tax bracket indifferent between the two bonds, all else the same?

2. A Treasury bill has a bid yield of 2.87 and an ask yield of 2.85. The bill matures in 203 days. Assume a face value of $1,000. What is the least you could pay to acquire a bill? (Note: You may need to review material from an earlier chapter for the relevant formula.)

3. A taxable issue yields 5.9 percent, and a similar municipal issue yields 4.4 percent. What is the critical marginal tax rate?

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Financial Management, Finance

Category:- Financial Management
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