1. The City of Tempe has a municipal bond outstanding with an interest rate of 3.6%. For an investor in the 35% tax bracket, what is their tax equivalent yield?
a 4.8%
b 5.5%
c 5.1%
d 5.3%
2. What would you be willing to pay for a $1000 par, 7 1/2% coupon bond with 20 years until maturity if you wanted to earn a return of 7%?
a $951
b $1035
c $966
d $1053