Review Questions

BBB-rated corporate bonds are riskier than AAA-rated bonds. Explain where the two yield curves will lie relative to each other. ... If a taxpayer's marginal tax rate is 33 1/3 percent, the after tax yield on a corporate bond that pays 5 percent interest is 3.33 percent interest (5 percent – (5 percent x .333 percent) = 3.33 percent). The rate ... ................
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