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A bank is considering two securities: a 30-year Treasury bond yielding 6 percent and a 30-year municipal bond yielding 5 percent

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A bank is considering two securities: a 30-year Treasury bond yielding 6 percent and a 30-year municipal bond yielding 5 percent.

 

 

a. If the bank's tax rate is 40 percent, calculate the Treasury bond's after-tax yield. (Round your answer to 2 decimal places. (e.g., 32.12))

 

 

  After-tax yield _________ % 

 

 

b. Which bond offers the higher after-tax yield?   

 

Municipal bond

Treasury bond