If the marginal investors tax rate is 30 and taxable bonds


1. If your tax rate is 20%, what interest rate do you earn in after-tax terms if the before-tax interest rate is 6%?

2. If the marginal investor's tax rate is 30% and taxable bonds offer a rate of return of 6%, what rate of return do equivalent muni bonds offer?

3. On March 28, 2008, tax-exempt AAA-rated 5-year muni bonds traded at a yield of 3.04%. Corporate 5-year AAA bonds traded at 4.14%. What was the marginal investor's tax rate?

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Financial Management: If the marginal investors tax rate is 30 and taxable bonds
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