FINA3331_Solutions to HW1

# FINA3331_Solutions to HW1 - FINA3331 Homework 1 Instructor...

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FINA3331- Homework 1 Instructor : Alexandra K. Theodossiou Spring 2011 Student name:__________________________________ Points: ________ Homework 1 consists of 3 problems and it is due at the beginning of our class on Friday February 18, 2011. Max grade for homework 1 is 10 points, minimum 0. Problem 1 is worth 2 points, problem 2 is worth 3 points and problem 3 is worth 5 points. All steps should be shown and they should appear on this document (handwritten or typed). Your homework should be stapled and have your name on it. For every day the homework is late 5 points (of the ten) will be deducted. Late homework will not be penalized if there is a valid excuse and prior notification of the professor. Always keep a copy of your homework solutions for your own records. Detailed solutions of the homework will be posted on Blackboard 1 day after the due date. 1. Assume that you have the choice between investing in a municipal bond offering 5.15% and a corporate bond offering 6.78%. At what tax rate would you be indifferent between the two? If your actual tax rate was 25% which one would you have chosen and why?

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FINA3331_Solutions to HW1 - FINA3331 Homework 1 Instructor...

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