The bond’s after-tax yield.

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Chapter 6, Problem 1P

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To determine: The bond’s after-tax yield.

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An investor recently purchased a corporate bond that yields 9%. The investor is in the 36% combined federal and state tax bracket. What is the bond’safter-tax yield?

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An investor purchases one municipal bond and one corporate bond that pay rates of return of 9% and 10.5%, respectively. If the investor is in the 20% tax bracket, his after-tax rates of return on the municipal and corporate bonds would be, respectively, _____.