1. Assume that Jane Richards pays income taxes at a 35 percent rate. She currently owns a not-for-profit (municipal) bond that pays 5 percent interest. What interest rate would have to be set on a for-profit (corporate) bond to produce the same amount of usable (after-tax) income? please use this formula AT = BT x (1-T)
2. You have calculated the following returns for an individual stock:
Periods Return
Month 1 6.21%
Month 2 1.08%
Month 3 16.03%
Month 4 7.53%
Month 5 -1%
What is the stock's expected rate of return?