The yield on a corporate bond is 10 , and it is currently selling at par The marginal tax rate is 20 A par value municipal bond with a coupon rate of 8 50 is available Which security is a better buy ...

To determine which security is better formula is used ...

The yield on a corporate bond is 10%, and it is currently selling at par. The marginal

Question:

The yield on a corporate bond is 10%, and it is currently selling at par. The marginal tax rate is 20%. A municipal bond with a rate of 8.50% is available. Which security is a better buy?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...