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Why are money market securities sometimes referred to as cash equivalents LO 2-1 A municipal bond carries a coupon rate of 6¾% and is trading at par What would be the equivalent taxable yield

  1. Why are money market securities sometimes referred to as “cash equivalents”?

(LO 2-1)

  1. A municipal bond carries a coupon rate of 6¾% and is trading at par. What would be the equivalent taxable yield of this bond to a taxpayer in a 35% tax bracket? (LO 2-1)

  2. Suppose that short-term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%. Which gives you the higher after-tax yield if your tax bracket is: (LO 2-1)

    1. Zero b. 10% c. 20% d. 30%

Jun 18 2020 View more View Less

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