A bank is considering two securities: a 30-year Treasury bond yielding 10 percent and a 30-year municipal bond yielding 6 percent.
a. If the bank’s tax rate is 20 percent, calculate the Treasury bond's after-tax yield. (Round your answer to 1 decimal place. (e.g., 32.1))
After-tax yield %
b. Which bond offers the higher after-tax yield?
30-year Treasury bond
30-year municipal bond