In September of 2016 it was reported that AAA rated corporate bonds with 20 years to maturity were yielding 3.18%, while AAA rated municipal bonds of the same maturity yielded 2.57%.

a. Based on this information, what was the implied marginal tax bracket(break-even tax bracket) at that time for bonds of this maturity and risk level?

b. If a Clark County Water Reclamation District revenue bond yields 2.7%, what is its tax-equivalent yield for an investor in the 28% tax bracket?

Answer rating: 100% (QA)

Answer 1 AAA rated Corporate Bonds maturity yielded 318 AAA Municipal bonds maturity y... View the full answer