2. BONDS: a. Sarah is considering investing in bonds. If the state income tax is 6% and her federal tax bracket is 25%, in which bond should she invest? i. A taxable corporate yielding 7.6% ii. An in-state muni yielding 4.9%? b. You paid $928.75 for a 4.5% bond one year ago. You collected the semi-annual coupon payments over the course of the year. Today, interest rates are higher, so bond prices have fallen. You sell the bond at $870.20. Calculate your holding period return. c. Explain the significance of an inverted yield curve under the Expectations Theory?

2. BONDS: a. Sarah is considering investing in bonds. If the state income tax is 6% and her federal tax bracket is 25%, in which bond should she invest? i. A taxable corporate yielding 7.6% ii. An in-state muni yielding 4.9% ? b. You paid $928.75 for a 4.5% bond one year ago. You collected the semi-annual coupon payments over the course of the year. Today, interest rates are higher, so bond prices have fallen. You sell the bond at $870.20. Calculate your holding period return. c. Explain the significance of an inverted yield curve under the Expectations Theory