An investor is in the $43$ percent federal tax bracket. For this investor a municipal bond paying $8$ percent interest is equivalent to a corporate bond paying

interest. $(5$ point$)$

A$.11\mathrm{.}79$ percent

B$.14\mathrm{.}03$

percent

C$.12\mathrm{.}28$

percent

D$.9\mathrm{.}68$

percent

E$.8\mathrm{.}47$

percent

A $60-$day maturity money market security has a bond equivalent yield of $4\%.$ The security$\text{'}$s EAR $($Effective Annual Return$)$ is $(5$point$)$

A$.3\mathrm{.}69\%.$

B$.3\mathrm{.}61\%.$

C$.3\mathrm{.}55\%.$

D$.3\mathrm{.}87\%.$

E$.4\mathrm{.}06\%.$

A T$-$bill that is $225$ days from maturity is selling for $97,850.$The T$-$bill has a face value of $100,000.$ Calculate the discount yield and bond equivalent yield on the T$-$bill. $(5$point$)$

You can invest in taxable bonds that are paying a yield of $9\mathrm{.}50$ percent or a municipal bond paying a yield of $7\mathrm{.}75$ percent. If your marginal tax rate is $31$ percent, which security bond should you buy. Why? $(4$ point$)$

Suppose that $$10$ million face value commercial paper with a $170-$day maturity is selling for $$9\mathrm{.}55$ million. What is the BEY $($Bond Equivalent Yield$)$ on the paper? $(5$ point$)$