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Business, 04.10.2019 18:20 keripressley148

Suppose that a corporate bond with a baa credit rating and five years to maturity has a yield to maturity of 8 percent. suppose that the government of the city of udwellum, which has a baa credit rating, issues a bond with the same time to maturity in a market that is just as liquid as the market for corporate bonds. suppose that investors have a federal tax rate of 30 percent. calculate the interest rate that udwellum should pay on its bonds if they will yield the same after-tax rate of return to investors as comparable corporate bonds. show your work.

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