A a married couple from california is in the 31 federal tax, Ask an Expert

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(A) A married couple from California is in the 31% Federal tax bracket and the 10% California tax bracket. They are considering a 51⁄2% Arizona municipal bond (Federal tax-free), a 5% California bond (double tax-free) or a 71⁄2% corporate bond (fully-taxable). Which bond offers the highest after-tax interest rate? (Please show at least 3 digits.)?

(B) A bond with a par value (a.k.a. face value) of $1,000 that pays 8% is currently priced at $1,100. What is the nominal interest rate? Calculate the current yield. (Please show at least 3 digits.)

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Financial Management, Finance

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