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The remainder of the assessment refers to this information: As a bond investor, you are looking to purchase whichever of the below bonds has a
The remainder of the assessment refers to this information: As a bond investor, you are looking to purchase whichever of the below bonds has a better after-tax return to you. You consider all other factors the same. The first bond is a corporate bond that matures in 5 years, pays a 10% semi-annual coupon, has a face value of $10,000, and trades at a YTM of 9.5%. The second is a municipal that matures in 5 years, pays a 6% semi-annual coupon, has a face value of $10,000, and trades at a YTM of 5.8%. Assume a 50% tax rate. What is the PV of the corporate bond? Question 29 4 pts What is the price of the Municipal bond? Question 30 2 pts Calculate a single after-tax coupon payment on the corporate
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