Question: PLEASE HELP PLZ ANSWER ASAP PLZ The information will be used for the two questions. You, as an investor, are comparing two bonds: a corporate

PLEASE HELP PLZ ANSWER ASAP PLZ

The information will be used for the two questions. You, as an investor, are comparing two bonds: a corporate and a municipal. They both have a face value (par) of $1,000 and a 5-year term to maturity. The corporate bond has an 8% annual coupon and an 8.5% yield to maturity. The municipal bond has a 6% coupon and a 5.5% yield to maturity. Please calculate the Price of the corporate bond.

1) Assume you have a 35% tax rate, what is the after-tax coupon payment that you will receive.

2) What is you after-tax return on the corporate?

Using expectations theory: You observe that there is a one-year Treasury bond with a yield of 2.0%. You also assume that rates will be going up and that the one-year bond will go up by 0.5% each year. As an example, you expect the one-year bond in year 2 will be 2.5% and 3% in year 3. 1) With that information, what do you expect the 3-year interest rate to be?

2) What rate do you expect a 5 year bond to have?

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