1) In order for you to be indifferent between the after tax returns on a taxable bond paying 2.49% and a tax-exempt bond paying 2.12%, what would your tax bracket need to be?

2. (slide 37) Consider the three stocks in the following table.

Stock	Shares Outstanding (in million shares)	Price ($)
		t=0	t=1
K	90	32	40
M	30	90	85
R	55	41	47

Calculate the rate of return on a price-weighted index of these three stocks from t=0 to t=1. (Assume a divisor of 3)

Calculate the rate of return on a value-weighted index of these three stocks from t=0 to t=1.

Calculate the rate of return on an equally-weighted index of these three stocks from t=0 to t=1. Show calculations using both arithmetic average and geometric average.