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If the Sampsons should consider bonds, should they invest in corporate bonds or municipal bonds? Factor into

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If the Sampsons should consider bonds, should they invest in corporate bonds or municipal bonds? Factor into your analysis the return they would receive after tax liabilities, based on the bonds having a $ 1,000 par value and the Sampsons being in a 25% marginal tax bracket.
If the Sampsons should consider bonds, should they invest in
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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After-Tax Rate Computation Corporate Bond Yield Marginal Tax Rate After-Tax Rate Annual After-Tax Interest ($)

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Highlyrated corporate bonds will generate interest income of 8 of ...View the full answer


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Bond valuation is the process of determining the worth of a bond. It is based on the present value of the bond\'s future cash flows, which include coupon payments and the return of the bond\'s face value (or \"principal\") at maturity. The discount rate used in the calculation is directly tied to prevailing interest rates, and a rise in interest rates will decrease the present value of the bond and thus lower its price. Conversely, a fall in interest rates will increase the present value of the bond and raise its price. Interest rates serve as a benchmark for determining the value of a bond, as they determine the discount rate used in the bond valuation calculation. The most commonly used measure of interest rates is the yield to maturity (YTM), which represents the internal rate of return of an investment in a bond if the investor holds the bond until maturity and receives all scheduled payments. Yield to maturity is a function of the coupon rate, the current market price of the bond, the face value of the bond, and the number of years remaining until maturity. By comparing the yield to maturity of a bond to prevailing market interest rates, an investor can assess the relative value of the bond.

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