Find the equivalent taxable yield of the municipal bond for tax brackets of zero, 10%, 20%,...

Find the equivalent taxable yield of the municipal bond for tax brackets of zero, 10%, 20%, and 30%, if it offers a yield of 3.30%

Tax Brackets

a.Zero % =

b.10% % =

c.20% =

d.30% % =

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 11 months ago

A taxable bond has a yield of 8.50% and a municipal bond has a yield of...

A taxable bond has a yield of 8.50% and a municipal bond has a yield of 5.95%. At what tax rate would you be indifferent between the two bonds (i.e., the rate where the returns on the two bonds are equal)? a. 40.00 percent b. 25.00 percent c. 35.00 percent d. 30.00 percent North Side Corporation is expected to increase dividends at 10 percent rate each year over the next three years. Afterward, the company pledges to maintain a constant...

A. What are the tax risks associated with municipal bonds? B. What is the equivalent taxable...

A. What are the tax risks associated with municipal bonds? B. What is the equivalent taxable yield for an investor with a 35% marginal tax rate who could buy a tax-exempt municipal bond with a yield of of 8.5%? C. Why might the equivalent taxable yield be limited in how it measures the relative value of a tax-exempt bond versus a taxable bond?

(a) Suppose you purchase a 20-year, zero-coupon bond with a yield to maturity of 10%. For...

(a) Suppose you purchase a 20-year, zero-coupon bond with a yield to maturity of 10%. For a face value of $800, the bond will initially trade for (b) If the bond’s yield to maturity change to be 12%, what will its price be five years later? (c) If you purchased the bond at $118.91 and sold it 5 years later, what would the rate of return of your investment be?

You find a zero coupon bond with a par value of $10,000 and 20 years to maturity. The yield to maturity on this bond is...

You find a zero coupon bond with a par value of $10,000 and 20 years to maturity. The yield to maturity on this bond is 4.2 percent. Assume semiannual compounding periods. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

For 2017 the actual tax brackets for a single tax filer were: • For taxable income...

For 2017 the actual tax brackets for a single tax filer were: • For taxable income from $0 to $9,325, you pay 10% of it in taxes, plus • For taxable income from $9,326 to $37,950, you pay 15% of it in taxes, plus • For taxable income from $37,951 to $91,900, you pay 25% of it in taxes, plus • For taxable income from $91,901 to $191,650, you pay 28% of it in taxes, plus • For taxable income...

Corporate Tax Rate Schedule Taxable income brackets Tax calculation Base tax + (Marginal rate × amount...

Corporate Tax Rate Schedule Taxable income brackets Tax calculation Base tax + (Marginal rate × amount over bracket lower limit) $ 0 to $ 9,525 $ 0 + (10% × amount over $ 0) 9,525 to 38,700 $ 953 + (12% × amount over $ 9,525) 38,700 to 82,500 $ 4,454 + (22% × amount over $ 38,700) 82,500 to 157,500 $ 14,090 + (24% × amount over $ 82,500) 157,500 to 200,000 $ 32,090 + (32% × amount over...

It is now date zero. Currently the yield on a one-year bond is 10%, on a...

It is now date zero. Currently the yield on a one-year bond is 10%, on a two-year bond is 15%, and on a three-year bond is 17%. Furthermore, everyone expects inflation to run at 5% this year, 10% next year and at 15% the year after that. Assuming that the pure expectations model correctly describes the behavior of the term structure, calculate the market’s expectation of the following: a. The nominal interest rate on a one-year bond originating date 1...

After-tax Yield. You need to choose between investing in a one-year municipal bond with a 0.01...

After-tax Yield. You need to choose between investing in a one-year municipal bond with a 0.01 yield and a one-year corporate bond with an 0.09 yield. If your marginal federal income tax rate is 0.22 and no other differences exist between these two securities, which one would you invest in? For the answer, enter the after-tax yield that you will ultimately get once you choose the best bond. Enter the answer as a decimal using 4 decimals (e.g. 0.1234).

Suppose a 10-year zero-coupon bond (zero) is trading spot at 6% and a 20-year zero is...

Suppose a 10-year zero-coupon bond (zero) is trading spot at 6% and a 20-year zero is trading spot at 8%. We know that the 10 year forward rate for a 10 year zero must be 0.1004 (annual compounding). All are risk free. If the rates are not 0.1004 for the forward you can make a free profit by using arbitrage. Suppose you have $0 dollars today but are allowed to sell and buy $100,000 worth of zero coupon bonds (and...

Suppose a 10-year zero-coupon bond (zero) is trading spot at 5% and a 20-year zero is...

Suppose a 10-year zero-coupon bond (zero) is trading spot at 5% and a 20-year zero is trading spot at 7%. In lectures (L4.9) we proved that the 10 year forward rate for a 10 year zero must be 0.0904 (annual compounding). All are risk free. If the rates are not 0.0904 for the forward you can make a free profit by using arbitrage. Suppose you have $0 dollars today but are allowed to sell and buy $100,000 worth of zero...

Question