A 7-Year Municipal Bond Yields 4

question 30

Multiple Choice

A 7-year municipal bond yields 4.80%.Your marginal tax rate (including state and federal taxes) is 36.00%.What interest rate on a 7-year corporate bond of equal risk would provide you with the same after-tax return? (Round your final answer to two decimal places. )

• A) 6.08%
• B) 6.45%
• C) 9.30%
• D) 9.08%
• E) 7.50%

---

Definitions:

Merchant

A person who deals in goods of the kind or by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction, or a person who employs an intermediary who, by her occu- pation, holds herself out as having such knowledge or skill.

Sale

A transaction between two parties where the buyer receives goods, services, or property in exchange for money.

Lease

A contractual agreement where one party (the lessee) pays the other (the lessor) for use of an asset for a specified period.

Express Warranties

Explicit guarantees provided by a seller to a buyer, assuring certain standards of quality and reliability for a product.