1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
astraxan [27]
3 years ago
9

A corporate bond currently yields 8.10%. Municipal bonds with the same risk, maturity, and liquidity currently yield 5.5%. At wh

at tax rate would investors be indifferent between the two bonds?
Business
1 answer:
4vir4ik [10]3 years ago
6 0

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%

Tax rate = (8.1% - 5.5%)/8.1% = 32.1%

You might be interested in
Select the correct answer from each drop-down menu. What is the basis for the calculation of interest payable by various financi
arlik [135]

Answer:

The interest payable is calculated based on the principal, interest rate, number of years of the loan or of the deposit.

Explanation:

Financial institutions is a company or a firm that deals with financial and monetary activities such as; loans, deposits, investments and currency exchange. Most financial transactions especially loans and savings usually have an interest rate that is set by the financial institution. The amount of interest can be paid by the borrower in a case where an individual takes a loan from the financial institution. Interest can also be paid by the financial institution in a case where the individual or group opens a savings account with the financial institution. In both cases, the interest rate is set by the financial institution. The amount of interest payable can be determined using the formula below;

A=PRT

where;

A=amount of interest payable

P=principle amount. The principal amount can either be the loan amount or the savings deposit amount

R=interest rate

T=number of years

The interest payable is calculated based on the principal, interest rate, number of years of the loan or of the deposit.

3 0
3 years ago
A __________-__________ bond is a straight fixed-rate bond issued in one currency that pays coupon interest in that same currenc
riadik2000 [5.3K]

A dual-currency bond is known to be a hybrid debt instrument that often has payment obligations over the life of the issue. A dual currency bond is a straight fixed-rate bond issued in one currency that pays coupon interest in that same currency.

  • In dual currency bond, the borrower often makes coupon payments in one currency, but get the principal at maturity in another currency.

Its advantage is that Investors using this bonds often gets higher coupon payments than straight bonds etc.

Straight fixed-rate bond issues often have a Known maturity date where the principal of the bond issue is said to be repaid.

Learn more from

brainly.com/question/2692687

3 0
2 years ago
Analysis of the general environment enables a firm to identify: a. capabilities b. opportunities and threats c. strategic resour
attashe74 [19]

Option B

Analysis of the general environment enables a firm to identify: opportunities and threats

<u>Explanation:</u>

The general environment usually has a sturdy impact on a firm's level of achievement, officials must pursue biases and circumstances as they emerge and attempt to envision the associations of these biases and circumstances.

The environmental inquiry is an imperative tool. It is a manner to distinguish all the outside and subjective factors, which can influence the organization’s execution. The review involves valuing the level of threat, an opportunity the determinants might impersonate. These determinants are succeeding rendered into further means.

6 0
3 years ago
A salesperson is trying to sell you a phone that has 16gb of memory saying, “that’s enough space to record an hour of high quali
Reptile [31]
A 16GB memory has the capacity to hold much more than an hour of high quality video. The quality of a video determines how much space it will occupies. An average top quality video can not be more than 3.6 GB in size. This means that, a 16 GB memory will hold more than fours hours long video recording. It can be much more than this is the video is of low quality.
5 0
3 years ago
Read 2 more answers
What is gained by using the Circular Flow Diagram to illustrate GDP?
Y_Kistochka [10]
Not much is gained but it would be c
7 0
3 years ago
Other questions:
  • The company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a
    12·1 answer
  • Classified ads are printed only in newspapers. True False
    14·2 answers
  • Bank runs:_______ a. will affect neither the money supply nor the money multiplier. b. are a problem because banks only hold a f
    8·1 answer
  • A customer of a brokerage firm in liquidation has an individual account with $300,000 in securities. The customer and his wife h
    9·1 answer
  • A(n) ________ collects data from various key business processes and stores the data in a single comprehensive data repository, u
    10·1 answer
  • Assume you have a brand new baby today. You plan to make 18 $1,000 annual deposits in her college savings account, starting on h
    12·1 answer
  • An asset with a net book value of $1,225 was discarded, having no market value. How much will be recorded as a loss or gain on d
    12·1 answer
  • The exchange rate for a stable country
    7·1 answer
  • Give three reasons why building apps might not be the sole source of income for an individual.
    10·1 answer
  • Say that transaction costs are high because there are many parties to a property use dispute. If the externality is caused by, s
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!