Calculate the treasury bond after-tax yield

Assignment Help Financial Management
Reference no: EM131535466

A bank is considering two securities: a 30-year Treasury bond yielding 7 percent and a 30-year municipal bond yielding 2 percent. a. If the bank’s tax rate is 35 percent, calculate the Treasury bond's after-tax yield. (Round your answer to 1 decimal place. (e.g., 32.1)) After-tax yield % b. Which bond offers the higher after-tax yield? 30-year Treasury bond 30-year municipal bond

Reference no: EM131535466

Questions Cloud

Company is interested in purchasing an oil : Your company is interested in purchasing an oil well for 8,000,000. It costs 4.00 a barrel to get it to Henry Hub and sell the oil. Your cost of capital is 10%.
Weighted average cost of capital-make the investment : Your weighted average cost of capital is 12%, but your hurdle is 14%. Should you make the investment and why or why not?
Your firm has debentures with coupon : Your firm has debentures with a coupon of 5%, a maturity of 5 years, and a market value of 975 per bond
What is the sample standard deviation : What is the sample standard deviation of the above returns?
Calculate the treasury bond after-tax yield : If the bank’s tax rate is 35 percent, calculate the Treasury bond's after-tax yield.
Calculate the bank total operating income : Calculate THE Bank’s total operating income. Calculate THE Bank’s spread.
What is security equivalent pre-tax yield : A bank is considering an investment in a municipal security that offers a yield of 7 percent. What is this security’s equivalent pre-tax yield.
What price would you estimate for halliford stock : Halliford Corporation expects to have earnings this coming year of $2.894 per share. what price would you estimate for Halliford stock?
Define the preemptive rights and recapitalization : Define the Preemptive rights. Recapitalization. Dividend payout. Free Cash Flow

Reviews

Write a Review

Financial Management Questions & Answers

  Compute the net present value of this project

Northwest Industries is considering a project with the following cash flows: Initial Outlay=$2,800,000 After-tax operating cash flows for years 1-4=$850,000 per year, Additional after-tax terminal cash flow at end of Year 4=$125,000 Compute the net p..

  Amount of goodwill involved in this transaction

An acquiring firm is willing to pay a 25 percent premium for a target firm's shares, currently selling at $20 per share. The target has one million shares outstanding, current assets of $5 million, fixed assets of $40 million, and liabilities of $20 ..

  Participate in money-and bond markets and equity securities

How institutional investors and individuals participate in money, stock, and bond markets, and equity securities?

  Find the value of the fra from the perspective of the party

Find the value of the FRA from the perspective of the party paying fixed and receiving floating as of the point in time at which the above term structure applies.

  Write a one-year call option-risk-free rate

You buy a share of stock, write a one-year call option with X = $20, and buy a one-year put option with X = $20. Your net outlay to establish the entire portfolio is $18.60. What must be the risk-free interest rate? The stock pays no dividends.

  The pension fund from fluctuations in interest rates

You are to design for a small pension fund a bond portfolio to fund a $10 million obligation due in 4 years. The fund managers would like to use a 2-year zero along with an 8-year zero to fund the obligation. Currently, the yield curve is flat at aro..

  What is the bond price if priced with the assumption

What is the bond price if priced with the assumption that the call will be on the first available call? date?

  Write an investment policy statement covering

Gary Lee Weinrib (Mr. W) is a 60 year old divorced musician. He is planning on retiring in the next two years. He will quit touring and recording. What is a potential concern regarding royalty income from a retiring musician that may need to be addre..

  Determine the earnings per share and market to book ratio

Determine the Earnings per share, Price-to-earnings ratio, Book value per share, and Market-to-book ratio.- How much of the retained earnings total was added during 2006?

  Probability that project have a negative net present value

What is the probability that the project will have a negative net present value, assuming that net present value is normally distributed?

  How does your foreign exchange exposure arise

How does your foreign exchange exposure arise?-  How would you measure it?- Could your exposure be reduced by investing in manufacturing facilities abroad?

  What price will you receive margin call

You buy 500 shares of stock at a price of $57 and an initial margin of 65 percent. If the maintenance margin is 40 percent, at what price will you receive a margin call?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd