Offer in order to compete with MA municipal bond

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Reference no: EM131817289

1. Massachusetts state government issued a municipal bond with 5% yield to maturity (YTM). If you are in the 30% personal tax rate bracket, what return rate does a Six Flags corporate bond need to offer in order to compete with the MA municipal bond?

2. You are comparing a corporate bond with 8.5% yield to maturity (YTM) and a municipal bond with a 5.5% yield to maturity (YTM). At what income tax rate would you be indifferent between these two bonds? (i.e. they offer the same after-tax YTM)

Reference no: EM131817289

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