1.An investor is in the 25% marginal income-tax bracket. What is the taxable equ
ID: 2628603 • Letter: 1
Question
1.An investor is in the 25% marginal income-tax bracket. What is the taxable equivalent yield of a municipal bond with a yield to maturity of 2.8% for this investor?
A.11.2%
B.3.73%
C.2.10%
D.0.70%
2.Consider that you bought 50 shares of General Electric stock a year ago at $23.60 per share. By the end of the year, the company had paid $0.82 per share in dividends and its price now is $26.57. What was your profit in dollars?
A.$379.00
B.$189.50
C.$145.50
D.$41.00
3.Among stocks, long-term Treasury bonds, and Treasury bills, which has exhibited the least amount of risk over the past sixty years?
A.Stocks
B.Long-term Treasury bonds
C.Treasury bills
D.All had about the same risk
4.Which stock index represents a price average of 30 large stocks that together represent roughly 30 percent of the total stock value of all U.S. equities?
A.Dow Jones Industrial Average.
B.Standard & Poor's 500 Index.
C.S&P Industrial Average.
D.Nasdaq Composite.
5.A bond with 7 years left to maturity has a 5% coupon rate and is priced at $1,045.80. What is its yield to maturity? (assume a $1,000 par value and semiannual interest payments)
A.5.00%
B.2.12%
C.4.24%
D.2.5%
6.What is the purpose of the par value on a bond?
A.It is a benefit to the issuer for calling the bond.
B.It is the date the principal will be repaid.
C.It is the interest rate used to compute the bond
A.11.2%
B.3.73%
C.2.10%
D.0.70%
Explanation / Answer
1. B 2.8(1-.25)= 3.73
2. B
3. C
4. A
5. C
6. D
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