Question
You are looking for an investment. Your broker informs you that you can purchase a corporate bond issued by ABC Corporation which has a yield
You are looking for an investment. Your broker informs you that you can purchase a corporate bond issued by ABC
Corporation which has a yield of 8.15%. He also informs you that Hudson county will be issuing municipal bonds
that have a yield of 6.25%. You are presently in the 35% tax bracket. After comparing both bonds which bond would
you purchase. Please show your work in comparing the bonds.
Answer - After tax yield of corporate bonds
Answer - Which bonds do you buy?
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
5th edition
321280299, 321280296, 978-0321280299
