1) a. An investor is in the 20 percent federal tax bracket and pays a 5 percent state tax rate and 3 percent in local income taxes. If this investor has the option to receive a 5% municipal bond rate, how much should corporate bond rate be, so the investor prefers investing on corporate bonds? (show your work)

b.Let's say you have the option to invest in municipal bonds that come with 3% interest rate and corporate bonds that come with 4.5% interest rate. How much should tax rates be, so you are indifferent between the two options?(show your work)

2) The ask yield on a 4 percent coupon Treasury bond maturing in eight years is 4.488 percent. If the face value is $1,000, what should be the QUOTED price the bond today (use semiannual compounding)? Please show your work.