A municipal bond has a YTM of 4.11 percent while the YTM of a comparable taxable bond is 6.16 percent. What is the tax rate that will make an investor indifferent between the municipal bond and the taxable bond

tax-rate 32.73%

Explanation:

The municipal bonds are tax-free thus, the private corporate bond is a pre-tax yield. We should solve for thetax rate which makes the 6.16% private bond yield 4.11% after tax:

0.0611 x ( 1 - t ) = 0.0411

t = 1 - 0.0411/0.0611 = 0,32733224

Being taxed at 32.73% will make the investor indifferent between these two options.

the answer is: c.that person might be arrested and deported

filling w-4 form incorrectly usually would rise suspicions from government's auditors. when they notice such mistakes, they would send their teams to investigate the situation further.

if those investigation teams believe that the incorrectness is done on purpose (with malicious intent), that person can be arrested or deported

yes the correct answer was

b.the increased supply will create a surplus.