Question

The City of Tempe has a municipal bond outstanding with an interest rate of 3.6%. For an investor in the 15% tax

bracket, what is their tax equivalent yield?

4.6%

4.2%

4.4%

4.8%

Builtrite currently has a $1000 par, 7 year maturity, zero coupon bond outstanding that is selling for $711. What is the bonds yield to maturity?

6%

5%

3%

4%

If you purchase a $1000 par value bond for $1025 that has a 6 3/8% coupon rate and 8 years until maturity, what will be your annual return?

6.0%

6.1%

5.6%

5.8%

If your bond is convertible, you have the option of exchanging your bond for

zero coupon bonds

common stock

preferred stock

debentures

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