A bank is considering two securities: a 30-year Treasury bond yielding 6 percent and a 30-year municipal
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Question:
A bank is considering two securities: a 30-year Treasury bond yielding 6 percent and a 30-year municipal bond yielding 5 percent.
a. If the bank's tax rate is 40 percent, calculate the Treasury bond's after-tax yield.(Round your answer to 2 decimal places.(e.g., 32.12))
After-tax yield _________%
b. Which bond offers the higher after-tax yield?
Municipal bond
Treasury bond
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