Reference no: EM132925679

Questions -

Q1. Kayla is in the 28% federal income tax bracket and the 5% state income tax bracket. If she purchases a municipal bond yielding 4.25%, what is the equivalent yield on a taxable bond if the municipal bond income is exempt from both federal and state taxes?

A) 4.47%

B) 5.90%

C) 6.34%

D) 6.21%

Q2. What is the tax-equivalent yield of a double tax-free 4% municipal bond if the investor is in the 33% federal and 6% state tax brackets?

A) 6.35%

B) 5.97%

C) 6.56%

D) 4.26%

Q3. Annika bought euro denominated bonds when the exchange rate was .909 euro to the dollar. She paid $11,881 for the bonds. At the end of the year, the bonds were worth 10,600 euro; she received 400 euro in interest and the exchange rate was .921 euro to the dollar. What was her holding period return in U.S. dollars?

A) -0.74%

B) 1.85%

C) 0.53%

D) 5.30%