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If a corporate bond yields 9 percent and The investor is in a 36 percent combined federal and state tax bracket. What is the bonds after tax yield?
Wiki User
∙ 14y ago
subtracting a 36% marginal tax rate from 100% leaves 64% of income retained "net" of tax. Therefore Multiply .64 times 9% and get a 5.76% after tax yield.
Wiki User
∙ 14y ago
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If corporate bonds issued by Johnson Corporation currently yield 8 Municipal bonds of equal risk currently yield 6 At what tax rate would an investor be indifferent between these two bonds?
To find the federal tax rate at which the buyer would be indifferent between Muni bonds(which are tax free) and Corporate bonds(which fall under your tax bracket tax rate) you follow this simple formula: Corporate Bond Yield=(Municipal bond Yield)/(1- Federal tax rate) In this case you would solve for the Federal Tax Rate and get an answer of .25 or 25% http://luhman.org/Nts/Bond/140_Municipals.html
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