Municipal Bonds and Corporate Bonds Assignment | Homework for You
June 11th, 2020
Suppose you are in the 35% federal income tax bracket. You purchase 5-year maturity bonds issued by the State of Florida, where there are no state income taxes, and the bond coupon income is exempt from federal income taxes. If the municipal bond yield is 5%, what is taxable bond equivalent yield? If 5-year maturity corporate bonds with similar credit quality provide 8% yield, which bonds do you prefer between the municipal bonds and corporate bonds? Why? Get Finance homework help today