User Account

All Pages

What is the after-tax yield on the bond

Assignment Help Financial Management
Reference no: EM131296670

You are trying to decide whether to buy the ABC corporate bond that yields 6.5%, or the Bucksville municipal bond that yields 4.60%. a. If you are in a 15% marginal income tax bracket, what is the after-tax yield on the ABC bond? Which bond is the better investment, assuming all else equal? b. If you are in a 35% marginal income tax bracket, what is the after-tax yield on the ABC bond? Which bond is the better investment, all else equal? c. What do your answers in parts a and b say about the potential market for municipal bonds? What type of investor is most interested in these investments?

Reference no: EM131296670

Questions Cloud

What is your annualized return from these two investments : Suppose you have $90,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $90 per share. You also notice that a call option with a $90 strike price and six months to maturity is available. The premi..
Assume that required returns are based on the capm : The risk-free rate, R subscript f , is 6 percent and the market risk premium, open parentheses R with hat on top subscript m minus R subscript f close parentheses , is 5 percent. Assume that required returns are based on the CAPM. If the risk-free ra..
For capital budgeting purposes : XYZ Inc. needs to install a new manufacturing machine. The base price is $100,000. Installation costs are $10,000. After 3 years the machine will be sold for $75,000. Applicable depreciation rates are 33 percent, 45 percent, 15 percent, and 7 percent..
If businesses claim to have no extra-legal obligations : If businesses claim to have no extra-legal obligations, how can they claim the right to influence law and regulation? If law and regulation embed the moral framework and businesses have no extra-legal obligations, expertise or responsibility, are bus..
What is the after-tax yield on the bond : You are trying to decide whether to buy the ABC corporate bond that yields 6.5%, or the Bucksville municipal bond that yields 4.60%. a. If you are in a 15% marginal income tax bracket, what is the after-tax yield on the ABC bond?
The monthly returns for general dynamics-starbucks : At the beginning of the month, you owned $9,000 of General Dynamics, $5,000 of Starbucks, and $6,000 of Nike. The monthly returns for General Dynamics, Starbucks, and Nike were 6.20 percent, −1.40 percent, and −0.56 percent. What is your portfolio re..
What is the required after-tax refunding investment outlay : Oxford Corp. is considering refunding a $30,000,000, annual payment, 12% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $2 million of flotation costs on these bonds over their 30-year life. The new bonds would be issue..
What is the yield to maturity on a ten year : Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Group Health Cooperative and Co-directors of the organization's pension fund management division. What is the yield to maturity on a 10-year, 9 percent annual coupon, $1000 par va..
Should best managed care invest surplus in bonds or stock : Best Managed Care Inc. is a for-profit managed care company that serves the southeast of United States. It has $200,000 in surplus funds that it is considering investing in bonds that pay interest $10,000 per year or stock that pays dividends of $900..

Reviews

Write a Review

Financial Management Questions & Answers

  Target capital structure of common stock

Mullineaux Corporation has a target capital structure of 62 percent common stock, 7 percent preferred stock, and 31 percent debt. Its cost of equity is 12.7 percent, the cost of preferred stock is 5.7 percent, and the cost of debt is 7.4 percent. The..

  What is the expected value of each investment

You are trying to decide whether to invest some idle cash in undeveloped land or gold. You intend to hold either investment for 5 years before selling out and sailing the Caribbean. You have made the following estimates of the value of the land and g..

  Immediately after coupon payment-calculate the market price

A $10,000 par value bond with coupons at 8%, convertible semi-annually, is being sold three years and four months before the bond matures. The bond is redeemable at $C, and purchase will yield 6% convertible semi-annually to the buyer.

  About the margin purchase

You are bullish on GE and expect a rise in its share price in one year. Since you have only $10,000 available, you want to get a margin loan. The annual interest rate on margin loan is 4% and your broker requires a maintenance margin of 35%. If you b..

  What return did dayne earn in each year he held the stock

Yesterday Dayne sold the 250 shares of the Johnson & Johnson (J&J) stock that he owned for $61 per share. When he purchased the stock two years ago, Dayne paid $59.50 per share. Every three months during the time that he held the stock, Dayne receive..

  Identify when someone is an effective or in-effective leader

Trust and leadership go hand and hand in an organization. You cannot have effective leadership if people do not trust one another. The following attachment is developed by a consultant I have worked with Rob Fleischer. This list of signs provides can..

  Cash-rich us companies to initiate more-less share buybacks

If US Congress decided to LOWER the personal income tax rates would you expect: dividend yields of US companies increase or decrease? cash-rich US companies to initiate more or less share buybacks?

  Assume that money that is not withdrawn remains in account

In five years, you plan on starting graduate school to earn your MBA. You know that graduate school can be expensive and you expect you will need $15,000 per year for tuition and other school expenses. Assume that money that is not withdrawn remains ..

  Short-term securities prices and interest rates

Suppose the U.S. Treasury issued $50 billion of short-term securities and sold them to the public. Other things held constant, what would be the most likely effect on short-term securities' prices and interest rates?

  What is the delivered price of the living room set

Levin Furniture buys a living room set with a $4,700 list price and a 50% trade discount. Freight (FOB shipping point) of $45 is not part of the list price. What is the delivered price (including freight) of the living room set, assuming a cash disco..

  What is increase in probability of company generating losses

If the firm acquires the cars and finances them with debt as proposed, what is the increase in the probability of the company's generating losses during the coming year?

  What tools does the Fed use to execute monetary policy

Let’s discuss the actual tools of the Fed. What tools does the Fed use to execute monetary policy, and how do they work in practice? Of the monetary policy tools available to the Fed, which is preferred? Why?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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