What is the taxable equivalent yield for investment

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Reference no: EM131908254

1. Say a bank has a scheme where you can deposit $5,000 a year starting on the day your granddaughter is born till the day she turns 21 years old (22 deposits). For doing this the bank is ready to pay your grand daughter $3,000 on her 22nd birthday, and increase the amount by $2,000 every year till she turns 60. What rate of return per year compounded yearly did the bank pay for the deposits?

A-Around 2%

B-Around 5%

C-Around 8%

D-Around 11%

2. Kim owns a bond issued by MCC to build a new building that will house a new pool and racquetball facilities.It pays 5%. What type of bond is this and what is its main advantage? If Kim is in a 35% tax bracket, what is the taxable equivalent yield for this investment? If this bond is a revenue bond, what does that mean?

Reference no: EM131908254

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