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An investor is a 30% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what must?

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An investor is a 30% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what must?

Postby otis6 » Sat Sep 10, 2011 4:40 am

an investor is a 30% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what must municipals offer for the investor to prefer them to corporate bonds?
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An investor is a 30% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what must?

Postby biaiardo » Sat Sep 10, 2011 4:43 am

He keeps 70% of his taxable income. Therefore, munis must have a rate of .7*9%, or 6.3% or higher.

However, this is assuming the risk is the same. Munis are usually lower risk. I take it they haven't gotten to that chapter yet?
_
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An investor is a 30% combined federal plus state tax bracket. If corporate bonds offer 9% yields, what must?

Postby amd » Sat Sep 10, 2011 4:49 am

in my estimation regardless of how much munis are paying they exempt you from the income tax you would be paying on your investments
the difference between what you would pay and what you get on your munis is gravy to you
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