Question
Provide me with the pertinent information on the following two bonds: Texas Memorial Hospital (CUSIP: 445656EJ6) and Goldman Sachs (CUSIP: 38141GXE9). This should include the
Provide me with the pertinent information on the following two bonds: Texas Memorial Hospital (CUSIP: 445656EJ6) and Goldman Sachs (CUSIP: 38141GXE9). This should include the full name, relevant dates (issued, maturity, callable), status (senior, junior, etc.), terms (callable), any specified use of funds, and credit risk.
2. In equilibrium, these two bonds must yield the same after-tax rate of return. Therefore, what is the marginal bond investor's tax rate (hint: at what tax rate does an investor not get any tax benefit to buying either bond)?
3. Assume that there are two investors: one is retired and has a marginal tax rate of 15%, the other is wealthy and has a marginal tax rate of 39.6%. Each investor can choose to invest in either the corporate or municipal bond. Which investment does each take? Assume each taxpayer invests $100,000. What are their after-tax rates of return on each investment.
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