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Unformatted text preview: relative risk of treasury bonds goes down, Dt goes up, and Dt shifts right Pt goes up, and It goes down Outcome Risk Premium i^c-c^T rises Tax Status and Bond Prices Coupon Payments on Municipal bonds are exempt from Federal Tax Payments Tax-exempt Bond Yield = taxable bond yield * (1-tax rate) Taxable bond equivalent yield = (tax-exempt bond yield)/(1-tax rate)...
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This note was uploaded on 10/14/2009 for the course ECON 330 taught by Professor Neri during the Spring '08 term at Maryland.
- Spring '08