What yield would aaa rated municipal bonds need to offer

Reference no: EM131329248

1. The nominal interest rate is 9 percent and the inflation rate is 7 percent. What is the real interest rate?

2. Suppose investors face a tax rate of 40 percent on interest received from corporate bonds. Suppose AAA-rated corporate bonds currently offer yields of about 7 percent. Approximately what yield would AAA-rated municipal bonds need to offer to be competitive?

Reference no: EM131329248

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