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
Julli [10]
3 years ago
9

A 5-year corporate bond yields 9.70%. A 5-year municipal bond of equal risk yields 6.5%. Assume that the state tax rate is zero.

At what federal tax rate are you indifferent between the two bonds?a. 25.40%
b. 29.03%
c. 32.99%
d. 33.98%
e. 27.38%
Business
1 answer:
Roman55 [17]3 years ago
3 0

Answer:

c. 32.99%

Explanation:

Risk yield = bond yield*(1 - Federal tax rate)

    6.50% = 9.70%*(1 - Federal tax rate)

1 - Federal tax rate = 6.50%/9.70%

Federal tax rate = 1 - 6.50%/9.70%

                           = 32.99%

Therefore, The federal tax rate that you are indifferent between the two bonds is 32.99%

You might be interested in
The Fish House is expected to pay annual dividends of $1.23 and $1.25 at the end of the next two years, respectively. After that
lorasvet [3.4K]

Answer:

c. $8.05

Explanation:

Calculation to determine What is the value of this stock at a required return of 16.4 percent

First step is to calculate the P2

P2 = ($1.35/.164)

P2= $8.23

Now let calculate the value of the stock

P0 = [$1.23 /1.164] + [($1.25 + 8.23)/1.164^2]

P0 = $8.05

Therefore the value of this stock at a required return of 16.4 percent is $8.05

4 0
2 years ago
An investment offers a total return of 11 percent over the coming year. Alex Hamilton thinks the total real return on this inves
Ahat [919]

Answer:

2.87%.

Explanation:

The total return, also refer to as Nominal return or Money return, is based on the nominal interest rate. For example, let's say that you deposited $100 into a bank account and the bank offers you an annual return of 11%. This 11% is the stated interest rate, it is known as nominal interest rate, and it is rate before taking into account the effect of inflation. When we deduct the effect of inflation from nominal rate, it gives us the real rate. Real rate reflects the Purchasing Power. The Fisher equation will be used to determine the expected inflation rate. The Fisher equation is as follows:

                                            (1 + i ) = (1 + r) * (1 + h)

where

i = Nominal (Money) rate

r = Real rate

h = Inflation rate

Simply adjust the equation to calculate the inflation rate;

⇒ h = [(1 + i) / (1 + r)] - 1

OR h = [(1 + .11) / (1 + .079)] - 1 = 2.87%.

8 0
3 years ago
Darren is eligible to contribute to a traditional 401(k) in 2019. He forgot to contribute before year-end. If he contributes bef
Irina18 [472]

Answer:

True

Explanation:

Base on the scenario been described in the question which, Darren was eligible to assist to a traditional of 401,000 in 2019, but we were told he forgot and later he paid in 15, June 2020, he is look as though he paid in 2019 because and it is true.

The reason why the answer is true is that Darren is that the time he paid the money in July 15, 2020, it was still within the time he allowed to still pay for the year 2019, that's why he considered as though he paid in 2019.

5 0
3 years ago
ma Rich purchased 100 shares of Stockits, Inc.'s $1 par value common stock from Stockits for $5 per share. Which statements are
vivado [14]

The correct options for Which statements are true regarding the effect of this transaction on Stockits' financial statements are B. Stockholders' equity on the balance sheet increases. C. The financing activities section of the statement of cash flows increases.

Equity is something invested in the company by using its owner or the sum of the entire belongings minus the sum of the company's general liabilities. E.g., common stock, additional paid-in capital, favored inventory, retained income, and the amassed different complete earnings.

For most companies, high stockholders' equity shows more stable finances and greater flexibility in case of an economic or financial downturn. information stockholders' equity is one way that buyers can learn about the monetary health of a firm.

Your question is incomplete. Please read below for the missing content.

ma Rich purchased 100 shares of Stockits, Inc.'s $1 par value common stock from Stockists for $5 per share. Which statements are true regarding the effect of this transaction on Stockits' financial statements? (Select all that apply.)

A. A gains will be reported on the income statement.

B. Stockholders' equity on the balance sheet increases.

C. The investing activities section of the statement of cash flows increases.

D. The financing activities section of the statement of cash flows increases.

E. Stockholders' equity on the balance sheet decreases.

Learn more about Equity here brainly.com/question/1957305

#SPJ1

4 0
2 years ago
While we talk about stock market as if it were one big entity, the reality is that there are many stock markets around the world
3241004551 [841]
The appropriate response is true. Stock market is the total of purchasers and dealers (a free system of financial exchanges, not a physical office or discrete substance) of stocks (likewise called offers), which speak to proprietorship guarantees on organizations.
3 0
3 years ago
Read 2 more answers
Other questions:
  • Margot finally finished her Ph.D. program. Although she has a great and secure teaching job at an urban college, she does not ho
    5·1 answer
  • NNR Inc.'s balance sheet showed total current assets of $1,875,000 plus $4,225,000 of net fixed assets. All of these assets were
    12·1 answer
  • Suppose the total market value of all the final goods and services produced in the country of Rushya was $8 billion in 2008 (mea
    14·1 answer
  • Colina Production Company uses a standard costing system. The following information pertains to the current year. Direct labor h
    9·1 answer
  • Paula has developed a successful business selling appliances to homebuilders. She carefully monitors the issuance of new home pe
    7·1 answer
  • Interest-on-Interest Consider a $1,500 deposit earning 4 percent interest per year for 7 years. How much total interest is earne
    8·1 answer
  • A 20-year-old student wants to save $5 a day for her retirement. Every day she places $5 in a drawer. At the end of each year, s
    7·1 answer
  • "When Jiffy-Pop packaged its popcorn in an aluminum skillet, complete with attachable handle, it designed the package to become
    5·1 answer
  • A rental car company bought a new fleet of midsize cars and sold off its old midsize cars because they had too many miles on the
    15·1 answer
  • Two firms, A and B, each currently emit 100 tons of chemicals into the air. The government has decided to reduce the pollution a
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!