Reference no: EM131296670
You are trying to decide whether to buy the ABC corporate bond that yields 6.5%, or the Bucksville municipal bond that yields 4.60%. a. If you are in a 15% marginal income tax bracket, what is the after-tax yield on the ABC bond? Which bond is the better investment, assuming all else equal? b. If you are in a 35% marginal income tax bracket, what is the after-tax yield on the ABC bond? Which bond is the better investment, all else equal? c. What do your answers in parts a and b say about the potential market for municipal bonds? What type of investor is most interested in these investments?
|
What is your annualized return from these two investments
: Suppose you have $90,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $90 per share. You also notice that a call option with a $90 strike price and six months to maturity is available. The premi..
|
|
Assume that required returns are based on the capm
: The risk-free rate, R subscript f , is 6 percent and the market risk premium, open parentheses R with hat on top subscript m minus R subscript f close parentheses , is 5 percent. Assume that required returns are based on the CAPM. If the risk-free ra..
|
|
For capital budgeting purposes
: XYZ Inc. needs to install a new manufacturing machine. The base price is $100,000. Installation costs are $10,000. After 3 years the machine will be sold for $75,000. Applicable depreciation rates are 33 percent, 45 percent, 15 percent, and 7 percent..
|
|
If businesses claim to have no extra-legal obligations
: If businesses claim to have no extra-legal obligations, how can they claim the right to influence law and regulation? If law and regulation embed the moral framework and businesses have no extra-legal obligations, expertise or responsibility, are bus..
|
|
What is the after-tax yield on the bond
: You are trying to decide whether to buy the ABC corporate bond that yields 6.5%, or the Bucksville municipal bond that yields 4.60%. a. If you are in a 15% marginal income tax bracket, what is the after-tax yield on the ABC bond?
|
|
The monthly returns for general dynamics-starbucks
: At the beginning of the month, you owned $9,000 of General Dynamics, $5,000 of Starbucks, and $6,000 of Nike. The monthly returns for General Dynamics, Starbucks, and Nike were 6.20 percent, −1.40 percent, and −0.56 percent. What is your portfolio re..
|
|
What is the required after-tax refunding investment outlay
: Oxford Corp. is considering refunding a $30,000,000, annual payment, 12% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $2 million of flotation costs on these bonds over their 30-year life. The new bonds would be issue..
|
|
What is the yield to maturity on a ten year
: Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Group Health Cooperative and Co-directors of the organization's pension fund management division. What is the yield to maturity on a 10-year, 9 percent annual coupon, $1000 par va..
|
|
Should best managed care invest surplus in bonds or stock
: Best Managed Care Inc. is a for-profit managed care company that serves the southeast of United States. It has $200,000 in surplus funds that it is considering investing in bonds that pay interest $10,000 per year or stock that pays dividends of $900..
|