单选题 What is the present value of a 7 percent semi-annual pay corporate bond with a $1000 face value and 20 years to maturity if it is yielding 6. 375 percent?? If a municipal bond is yielding 4.16 percent and an investors marginal tax rate is 35 percent, would the investor prefer the corporate bond or the municipal bond? Value Investor preference ①A. $1121.23 municipal bond ②B. $1070.09 corporate bond ③C. $1070.09 municipal bond

A、

A. ①
B、

B. ②
C、

C. ③

【正确答案】 C

【答案解析】N=20×2=40; I/Y=6.375/2=3.1875; PMT=70/2=35; and FV=1000. Compute PV=$1070.09. The taxable-equivalent yield on the municipal bond is: 4.16%/(1-0.35)=6.4%. The investor would prefer the municipal bond because the taxable-equivalent yield is greater than the yield on the corporate bond: 6.4%＞6.375%.