Investors face a tax rate of 33 percent on interest


1. Investors face a tax rate of 33 percent on interest received from corporate bonds. If municipal bonds currently offer yields of 6 percent, what yield would equally risky corporate bonds need to offer to be competitive?

2. The rate of inflation is 5 percent and the real interest rate is 3 percent. What is the nominal interest rate?

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Financial Management: Investors face a tax rate of 33 percent on interest
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