Question
1- A municipal bond carries a coupon of 6 % and is trading at par. What is the equivalent taxable yield to a taxpayer in
1- A municipal bond carries a coupon of 6 % and is trading at par. What is the equivalent taxable yield to a taxpayer in a combined federal plus state 34% tax bracket?
2- The coupon rate on a tax- exempt bond is 5.6%, and the rate on a taxable bond is 8%. Both bonds sell at par. At what tax bracket marginal tax rate) would an investor be indifferent between the two bonds? 3- Why do most professionals consider the Wilshire 5000 a better index of the performance of the broad stock market than the Dow Jones Industrial Average?
4-What is meant by the LIBOR rate? The Federal funds rate? TED Spread?
5- Why are corporations more apt to hold preferred stock than are other potential investors?
Please answer each question and please show work!
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