Given a two-year, 8% annual coupon bond with a face value of Rs. 1,000 and with...

 

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Given a two-year, 8% annual coupon bond with a face value of Rs. 1,000 and with annual coupon payments that is fully taxable and selling at par, and an identical bond that is tax free, what would the yield and price on the tax-free bond have to be for an investor in a 35% tax bracket to be indifferent between the two bonds? Given a two-year, 8% annual coupon bond with a face value of Rs. 1,000 and with annual coupon payments that is fully taxable and selling at par, and an identical bond that is tax free, what would the yield and price on the tax-free bond have to be for an investor in a 35% tax bracket to be indifferent between the two bonds?