1) A corporate bond has a yield of 9.5% and a municipal bond has a yield of 7%. What is the after-tax

yield of the corporate bond if you are in the 31% tax bracket? Which bond is more attractive to invest

in?

2) Harrison Co. issued 15-year bonds two years ago at a coupon rate of 6%. The bonds make

semiannual coupon payments. If the YTM on the bonds is 4.5%, what is the current price assuming a

$1,000 par value?