Municipal bonds issued by regal health plans

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Reference no: EM131562220

Regal Health Plans issued municipal bonds with 10-year time to maturity and 8% coupon rate semiannually. An investor is subject to 30% tax bracket. For this investor, to invest in a corporate bond with the same bond rating and a yield of 10% is the same as to invest in the municipal bond issued by Regal Health Plans. (Bonds face value is $1,000)

What is the municipal bond’s yield?

What is the current price of the municipal bonds issued by Regal Health Plans? Is it discount or premium bond?

The investor bought the municipal bonds. One year later, the interest rate falls and the bond yield changes to 6%. What is the investor’s current yield? What is the investor’s capital gain yield?

Reference no: EM131562220

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