Which security bond should you buy

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Reference no: EM131936775

You can invest in taxable bonds that are paying a yield of 8.3 percent or a municipal bond paying a yield of 6.85 percent. Assume your marginal tax rate is 28 percent.

a. Calculate the after-tax rate of return on the taxable bond? (Round your answer to 2 decimal places.(e.g., 32.16))

Rate of return %

b. Which security bond should you buy?

Taxable bonds that are paying a 8.3 percent annual rate of return.

Municipal bond paying a 6.85 percent annual rate of return.

Reference no: EM131936775

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