Which has no tax liability and pay equivalently

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a) A bond pays 7% and it is taxable. How much will another bond of the same risk, which has no tax liability, pay equivalently?

b) What are the yield to maturity and the yield to call of a 20 year, 6% bond that is selling for $1050 has a call value of $1200 in year 3? Which will the investor make?

Reference no: EM131503717

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