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Andre45 [30]
2 years ago
13

An investor is in a 30% tax bracket. If corporate bonds offer 9% yields, what must municipals offer for the investor to prefer t

hem to corporate bonds?
Business
1 answer:
Oduvanchick [21]2 years ago
8 0

Answer:

6.30%

Explanation:

For offering for the investor to prefer them to the corporate bond we need to calculate the after tax return which is shown below

After tax return is

= Before tax return × (1 - tax rate)

= 0.09 × (1 - 0.30)

= 0.063 or 6.30%

As the after tax return is 6.30% the same is to be offered for the investor

Hence, the correct answer is 6.30%

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