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Sphinxa [80]
3 years ago
8

An investor is in a 30% combined federal plus state tax bracket. If corporate bonds offer 8.75% yields, what yield must municipa

ls offer for the investor to prefer them to corporate bonds
Business
1 answer:
Lilit [14]3 years ago
8 0

Answer:

6.125%

Explanation:

Calculation for what yield must municipals offer for the investor to prefer them to corporate bonds

The after-tax yield on the corporate bonds is: 8.75% x (1 - 0.30)

The after-tax yield on the corporate bonds is= 0.0875x 0.7

The after-tax yield on the corporate bonds is= 0.06125*100

The after-tax yield on the corporate bonds is= 6.125%

Therefore what yield must municipals offer for the investor to prefer them to corporate bonds is

6.125%

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4 0
3 years ago
Henry, Bekah, and Marcella are on the five-member Benefits Task Force that is researching options for the new benefits package.
xeze [42]

Answer:

groupthink.

Explanation:

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4 0
3 years ago
Select one of the statements about financial literacy that are not true.
wolverine [178]
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4 0
3 years ago
Read 2 more answers
A stock is currently at $50. Over each of the next two 6-month periods, the stock may move up to a factor 1.2 or down by a facto
ahrayia [7]

Answer:

Explanation:

Solution:

Parameters are u = 0.1, d = −0.1, 1 + r = e

0.5×0.08. So the risk-neutral probability is

p

∗ = 0.7. After evaluation of the options at the terminal nodes we use the risk-neutral

valuation to get (i)

πC(0) = e

−2(0.5×0.08) £

0.7

2 × 21 + 2 × 0.7(1 − 0.7) × 0 + (1 − 0.7)2 × 0

¤

= 9.61

and (ii)

πP (0) = e

−2(0.5×0.08) £

0.7

2 × 0 + 2 × 0.7(1 − 0.7) × 1 + (1 − 0.7)2 × 19¤

= 1.92

(iii) For put-call parity one has to verify S − πC + πP = Ke−r

, here :

100 − 9.61 + 1.92 = 100e

−0.08

.

4 0
4 years ago
For many years China relied on central planning but is currently moving away from a central market to a free market based econom
DanielleElmas [232]

The given statement is False.

For many years China relied on central planning but is currently moving away from a central market to a free market based economy. This would mean that China's economy is in a state of Transition. This statement is not necessarily True.

Explanation:

Free market is a market structure in which there is a little or no control of the government on supply and demands of the products or services. The structure of this market depends upon the political or legal rules.

If China moved from the central to the free market, it does not mean that is it in the state of Transition. This is because, it could be the choice of China itself to keep a balance between the command and the free market economies, whatever suit its needs.

Learn more about Transition of Chinese Market at:

brainly.com/question/830955

#LearnWithBrainly

5 0
4 years ago
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