Two investors are trying to determine which bond to buy. Investor 1 is in a 38 percent Federal tax bracket and pays 7 percent SC state taxes. Investor 2 is in an 18 percent Federal tax bracket and pays 7 percent SC state taxes. Their bond choices are a 5-year AAA-rated bond, with a 7.6 percent coupon rate issued by ABC Corporation a 5-year AAA-rated bond, with a 5.2 percent coupon rate issued by SC Dept of Education a 5-year AAA-rated bond, with a 4.3 percent coupon rate issued by US Treasury Dept a. Which bond should investor 1 buy? Explain and prove mathematically b. Which bond should investor 2 buy? Explain and prove mathematically

Answer rating: 100% (QA)

Bond Redemption Price Also called the redemption value or maturity value the bond redemption price i... View the full answer