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
riadik2000 [5.3K]
3 years ago
5

A municipal bond has yield to maturity of 4.83 percent. An investor with a marginal tax rate of 35 percent is indifferent betwee

n this municipal bond and an otherwise identical taxable corporate bond. What is the yield to maturity of the corporate bond
Business
1 answer:
mezya [45]3 years ago
3 0

Answer: 7.43%

Explanation:

The yield to maturity simply refers to the total return that is expected on a bond as long as the bond is held till it matures.

In this case, since the investor is indifferent between this municipal bond and an otherwise identical taxable corporate bond, the yield to maturity of the corporate bond will be:

4.83% = Corporate bond YTM × ( 1- 35%)

4.83% = Corporate bond YTM × 65%

Corporate bond YTM = 4.83% / 65%

Corporate bond YTM = 0.0483/0.65

Corporate bond YTM = 7.43%

The yield to maturity of the corporate bond is 7.43%

You might be interested in
The current highest interest rate on a savings account is 1.85%. the current rate of inflation is 1.9%. what is the real dollar
adoni [48]

Answer: 0.51

Explanation:

Nominal rate = 1.85%

Inflation rate = 1.90%

Real rate of return = (1 + nominal rate / 1 +inflation rate) - 1

Real rate of return = ((1 + 0.0185) / (1 + 0.019)) - 1

= (1.0185 / 1.019) - 1

= 0.9995 - 1 = - 0.0005

Therefore, the real dollar return I. $1,020 equals

0.0005 × 1020 = 0.51

3 0
3 years ago
Derick wants to purchase an existing business in the service industry. However, he does not want to use the traditional sources
OleMash [197]
The correct answer is B because there are websites that list businesses for sale along with contact information for dealing.
3 0
3 years ago
Read 2 more answers
The more precisely defined the target market is, the _____ the numbers are to estimate.
bija089 [108]
The answer is a I believe I'm not really sure
4 0
3 years ago
Read 2 more answers
National Storage issued $90 million of its 10% bonds on April 1, 2018, at 99 plus accrued interest. The bonds are dated January
Ahat [919]

Answer:

The total amount of cash  received is $91,350,000

Explanation:

The amount of cash proceeds realized from the bond issuance is the 99% of face value of $90 million plus the coupon interest due from January 2018(date of the bond) to April 1 ,2018(the date of bond issuance),that is three months of coupon interest payment.

The bond proceeds is computed as below:

Discounted bond price 99%*$90,000,000            =$ 89,100,000

Three months of interest 10%*$90,000,000*3/12   =$2,250,000

Total amount received from bond issue                    $91,350,000

3 0
3 years ago
Abbott Inc. owns 30% of the outstanding voting shares of Berta Inc. On the date of acquisition, the fair value of Berta's equipm
Vitek1552 [10]

Answer: During the year after the acquisition, the undervalued equipment will exceed Abbott's investment revenue by $1,200.

Explanation:

Multiply the amount exceeded of its carrying value by the % shares owned by Abbott.

Then divide the result by the useful life value of Barta's equipments

= (20,000 x 30%) / 5

= $1,200

3 0
3 years ago
Other questions:
  • The Microsoft/Nokia alliance that had hundreds of pages to specify each partner's responsibilities would be closest to the _____
    5·1 answer
  • You often find that employees choose a health care plan without carefully considering their options. In fact, sometimes employee
    8·1 answer
  • A company with $500,000 in operating assets is considering the purchase of a machine that costs $60,000 and which is expected to
    13·1 answer
  • Fixed financial charges include ________. stock repurchase expense common stock dividends and bond interest expense common stock
    11·1 answer
  • As an upper level manager in his organization, Lionel Tucker has been asked to mentor a less experienced, lower-level employee.
    6·1 answer
  • Stewart soaps began business by issuing 25,000 shares of $5 par value common stock for $20 per share. during its first year, the
    9·1 answer
  • One potential drawback of just-in-time (jit) production is that
    13·1 answer
  • Which factor of production controls and gives direction processes?
    8·2 answers
  • Which of these best describes the relationship
    13·1 answer
  • What are four ethical character traits
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!