What price should the municiple bond trade at in order to have a YTM 70 basis...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
What price should the municiple bond trade at in order to have a YTM 70 basis points above the treasury bond of the same maturity. Assume a 35% tax rate Show your calculations Muni Bond Price Coupon rate (paid annually) Face value Maturity YTM Diff Treasury Bond Price Coupon rate (paid semi annually 5%) 1000 Face valu 5 Maturity 1150 6% 1000 5 2.767% Treasury +70bps spread What price should the municiple bond trade at in order to have a YTM 70 basis points above the treasury bond of the same maturity. Assume a 35% tax rate Show your calculations Muni Bond Price Coupon rate (paid annually) Face value Maturity YTM Diff Treasury Bond Price Coupon rate (paid semi annually 5%) 1000 Face valu 5 Maturity 1150 6% 1000 5 2.767% Treasury +70bps spread
Expert Answer:
Answer rating: 100% (QA)
SOLUTION To calculate the price at which the municipal bond should trade to have a yieldtomaturity Y... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
The materials manager at Metropolitan Hospitals must plan for inventories at three hospital locations within the region. His plan is to allocate stock to these locations. It is necessary to predict...
-
Parent Inc. is contemplating a tender offer to acquire 80% of Subsidiary Corporation's common stock. Subsidiary's shares are currently quoted on the New York Stock Exchange at $85 per share. In order...
-
Each question refers to the same initial data. Treat each Part individually. Ignore income taxes. Assume no beginning or ending inventories.Unless stated otherwise, all calculations and income...
-
1. You and a friend agree to meet at your favorite restaurant between 5:00 P.M. and 6:00 P.M. The one who arrives first will wait 15 minutes for the other, and then will leave (see figure). What is...
-
An ideal air-standard Sterling cycle uses helium as working fluid. The isothermal compression brings the helium from 15 lbf/in 2, 70 F to 90 lbf/in 2. The expansion takes place at 2100 R and there is...
-
N-Butyl mercaptan is the common name of a foul-smelling substance obtained from skunk fluid. It is a thiol of the type RX, where R is an n-butyl group and X is the functional group that characterizes...
-
Timothy Muse opened a law office on October 2, 2010. During the first month of operations, the business completed the following transactions: Requirements 1. Open the following T-accounts: Cash,...
-
Erin Kramer Inc. has recently hired a new independent auditor, Jodie Larson, who says she wants to get everything straightened out. Consequently, she has proposed the following accounting changes in...
-
Part U67 is used in one of Broce Corporation\'s products. The company\'s Accounting Department reports the following costs of producing the 16,800 units of the part that are needed every year. Per...
-
The Electrotech Corporation manufactures two industrial-sized electrical devices: generators and alternators. Both of these products require wiring and testing during the assembly process. Each...
-
Universal Forest s current stock price is $ 6 3 . 0 0 and it is likely to pay a $ 0 . 6 7 dividend next year. Since analysts estimate Universal Forest will have a growth rate of 8 . 4 percent, what...
-
H ow long does it take a car to slow down from 5 4 km / h to 3 2 km / h over a distance of 6 5 m express the answer in seconds?
-
Since it is not easy to obtain credit spreads for individual companies, you have decided to use a traded index of credit default spreads in Australia, which is called iTraxx. See details below....
-
A 5 0 0 g squirrel with a surface area of 9 2 5 cm 2 falls from a 4 . 4 - m tree to the ground. a ) Estimate its terminal velocity. ( Use the drag coefficient for a horizontal skydiver. Assume that...
-
A person going for a walk follows the path, where y 1 = 2 5 2 m and = 5 4 . The total trip consists of four straight line paths. At the end of the walk, what is the persons resultant displacement...
-
Please answer each given questions by number. 1. To celebrate his 15th birthday, actor Abe, who has made a fortune at a young age, wanted to buy Bob's vintage car. Bob is Abe's fellow actor, who just...
-
The time before a breakdown is normally distributed and has a mean of 4 weeks and a standard deviation of 7 weeks. The value of z is -.84. What is thecalculated preventive maintenance interval?
-
Refer to the information from Exercise 22-19. Use the information to determine the (1) Weighted average contribution margin , (2) Break-even point in units, and (3) Number of units of each product...
-
1. How might some of the federal governments recent efforts to help stimulate economic growth affect consumers? 2. Where is the United States in the economic cycle now, and where does it seem to be...
-
(a) Should Lauren be concerned about these clauses? Why or why not? (b) Considering the rule of 78s clause, what will happen if Lauren pays off the loan before the regular due date? (c) If Lauren had...
-
1. Jessica Sotomajor hopes to earn an extra $600,000 over her remaining 40-year working career by going to night school to obtain a masters degree. If her income projection is correct, thats an...
-
Assume that an account has the following characteristics: Number of items in the account-300 Recorded amount- \(\$ 600,000\) Sample size-100 Required: a. If the sample mean is \(\$ 1,800\) and mean...
-
You desire to estimate the amount of the inventory of your client. Draper. Inc. You satisfied yourself earlier as to the inventory quantities. During the audit of the pricing and extension of the...
-
The following data for a substantive test using sampling are available: Population recorded amount- \(\$ 200,000\) Tolerable misstatement \(\$ 10,000\) Number of items in the population-200 Risk of...
Study smarter with the SolutionInn App