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4 June, 10:22

An investor purchases one municipal bond and one corporate bond that pay rates of return of 5% and 6.4%, respectively. If the investor is in the 15% tax bracket, his after-tax rates of return on the municipal and corporate bonds would be, respectively,

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  1. 4 June, 10:29
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    5% and 5.44%

    Explanation:

    municipal bond after tax is 0.5

    corporate bond after tax is 0.64

    so therefore: 0.64 (1-0.15) = 0.0544=5.44%

    5% and 5.44%
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