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Social Science Clinic => Accounting => Topic started by: ARLKQ on Sep 13, 2020

Title: If a fully-taxable bond yields a BTROR of 8% (Rb= 8%) and a tax-exempt bond of similar risk earns a ...
Post by: ARLKQ on Sep 13, 2020

Question 1

If a fully-taxable bond yields a BTROR of 10% (R_b = 10%) and a tax-exempt bond of similar risk earns a BTROR of 7.5% (R_f = 7.5%), then the implicit tax rate is
◦ 25%.
◦ 75%.
◦ 10%.
◦ None of these.

Question 2

If a fully-taxable bond yields a BTROR of 8% (R_b = 8%) and a tax-exempt bond of similar risk earns a BTROR of 5% (R_f = 5%), then the implicit tax is
◦ 3%.
◦ 5%.
◦ 8%.
◦ None of these.

Title: If a fully-taxable bond yields a BTROR of 8% (Rb= 8%) and a tax-exempt bond of similar risk earns a ...
Post by: Kaytorgator on Sep 13, 2020

Answer 1

25%.

Answer 2

3%.