Question

2. A bank is considering an investment in a municipal security that offer a yield of 6 percent. What is the security’s tax equivalent yield if the bank’s tax rate is 35 percent

Answer 1

1. A bank is considering two securities: a 30 year Treasury bond yielding 7 percent and a 30-year municipal bond yielding 5 percent. If the bank’s tax rate is 30 percent, which bond offers the higher tax equivalent yield?

Answer 2

.6543

Answer 3

this answer is not right