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The Relative Yields Of Tax Exempt And Taxable Bonds
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Book Synopsis The Relative Yields of Tax-Exempt and Taxable Bonds by : John Chalmers
Download or read book The Relative Yields of Tax-Exempt and Taxable Bonds written by John Chalmers and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Fama (1977) and Miller (1977) predict that one minus the corporate tax rate will equate the after-tax yield from a taxable bond to the tax-exempt yield. This prediction is not rejected for short maturity tax-exempt and taxable bonds. However, at long maturities the yields on tax-exempt bonds are higher than predicted by the theory. A popular explanation for this empirical fact is that municipal bonds bear more default risk than comparable taxable bonds. A sample of municipal bonds that are secured by irrevocable escrows of U.S. Treasury securities is used to examine the relation between taxable and tax-exempt yields. The results show that default-free tax-exempt yields display the same tendency to be too high relative to the Fama and Miller prediction. This fact implies that differential default risk does not explain relatively high yields on long-term tax-exempt bonds. This paper also documents a curious fact. U.S. Government secured municipal bonds have higher yields than comparable maturity AAA rated municipal bonds that are not secured by U.S. Treasury bonds.
Book Synopsis The Relative Yields of Tax-exempt and Taxable Bonds by : John M. R. Chalmers
Download or read book The Relative Yields of Tax-exempt and Taxable Bonds written by John M. R. Chalmers and published by . This book was released on 1995 with total page 214 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Stock Market Yields and the Pricing of Municipal Bonds by : N. Gregory Mankiw
Download or read book Stock Market Yields and the Pricing of Municipal Bonds written by N. Gregory Mankiw and published by . This book was released on 1996 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes an alternative to the traditional model for explaining the spread between taxable and tax-exempt bond yields. This alternative model is a special case of a general class of clientele models of portfolio choice and asset market equilibrium. In particular, we consider a setting with two types of investors, a taxable investor and a tax-exempt investor, who hold specialized bond portfolios. The tax-exempt investor holds only taxable bonds, and the taxable investor holds only tax-exempt bonds. Both investors hold equity, and the taxable and tax-exempt bond markets are linked through the equilibrium conditions governing equity holding and bond holding for each type of investor. In contrast to the traditional model, this alternative model has the potential to explain the small observed spread between taxable and tax-exempt yields. In addition, this model predicts that the yield spread between taxable and tax-exempt bonds should be an increasing function of the dividend yield on corporate stocks. Although the substantial changes in the tax code during the last four decades complicate the testing of this model, we find some support for the predicted relationship between the equity dividend yield and the yield spread between taxable and tax-exempt bonds.
Book Synopsis Taxing Municipal Bond Income by : Lyle C. Fitch
Download or read book Taxing Municipal Bond Income written by Lyle C. Fitch and published by Univ of California Press. This book was released on 2022-09-23 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt: This title is part of UC Press's Voices Revived program, which commemorates University of California Press’s mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1950.
Author :United States. Congress. Joint Committee on Internal Revenue Taxation Publisher : ISBN 13 : Total Pages :24 pages Book Rating :4.:/5 (327 download)
Book Synopsis Taxable Bond Alternative for State and Local Governments by : United States. Congress. Joint Committee on Internal Revenue Taxation
Download or read book Taxable Bond Alternative for State and Local Governments written by United States. Congress. Joint Committee on Internal Revenue Taxation and published by . This book was released on 1976 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Liquidity, Default, Taxes and Yields on Municipal Bonds by : Junbo Wang
Download or read book Liquidity, Default, Taxes and Yields on Municipal Bonds written by Junbo Wang and published by . This book was released on 2005 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors examine the relative yields of Treasuries and municipals using a generalized model that includes liquidity as a state factor. Using a unique transaction dataset, they estimate the liquidity risk of municipals and its effect on bond yields. They find that a substantial portion of the maturity spread between long- and short-maturity municipal bonds is attributable to the liquidity premium. Controlling for the effects of default and liquidity risk, they obtain implicit tax rates very close to the statutory tax rates of high-income individuals and corporations, and these tax rate estimates are remarkably stable over maturities.
Book Synopsis Taxing Municipal Bond Income by : Lyle Craig Fitch
Download or read book Taxing Municipal Bond Income written by Lyle Craig Fitch and published by . This book was released on 1950 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Expected Future Tax Policy and Tax-Exempt Bond Yields by : James M. Poterba
Download or read book Expected Future Tax Policy and Tax-Exempt Bond Yields written by James M. Poterba and published by . This book was released on 1986 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper tests several competing models of municipal bond market equilibrium. It analyzes the influence of changes in both personal and corporate tax reforms on the yield spread between taxable and tax-exempt interest rates. The findings suggest that changes in personal income tax rates have pronounced effects on long-term municipal interest rates, but small effects on short-maturity yields. Corporate tax reforms, however, affect both long- and short-term yields. These results are inconsistent with the view that the relative yields on taxable and tax-exempt bonds are set by banks and insurance companies which are taxed at the corporate rate. They support the more traditional view that banks are the primary holders of short-term muncipal securities, while households are the principal investors in the long-term municipal market. This view suggests that proposals to reform municipal financing policies by increasing the use of short-term borrowing, or issuing long-term floating-rate debt, could reduce the real cost of municipal borrowing
Book Synopsis On the Relative Yields of Taxable and Municipal Bonds by : Michael Jason Highfield
Download or read book On the Relative Yields of Taxable and Municipal Bonds written by Michael Jason Highfield and published by . This book was released on 2002 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Understanding Tax-exempt Bonds by : Phyllis C. Kaufman
Download or read book Understanding Tax-exempt Bonds written by Phyllis C. Kaufman and published by . This book was released on 1986 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Tax-exempt Securities and the Surtax by : Charles Oscar Hardy
Download or read book Tax-exempt Securities and the Surtax written by Charles Oscar Hardy and published by . This book was released on 1926 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Tax-exempt Bonds by : Arthur Chauncey Williams
Download or read book Tax-exempt Bonds written by Arthur Chauncey Williams and published by . This book was released on 1962 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Default Risk Cannot Explain the Muni Puzzle by : John Chalmers
Download or read book Default Risk Cannot Explain the Muni Puzzle written by John Chalmers and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Fama (1977) and Miller (1977) predict, that one minus the corporate tax rate will equate after-tax yields from comparable taxable and tax-exempt bonds. Empirical evidence show that long-term tax-exempt yields are higher than the theory predicts. Two popular explanations for this empirical puzzle are that, relative to taxable bonds, municipal bonds bear more default risk and include costly call options. I study U.S. government secured municipal bond yields that are effectively default-free and non-callable. These municipal yields display the same tendency to be too high. I conclude that differential default risk and call options do not explain the muni puzzle.
Book Synopsis The Taxation of Municipal Bonds by : Michael Mussa
Download or read book The Taxation of Municipal Bonds written by Michael Mussa and published by Studies in Tax Policy. This book was released on 1979 with total page 260 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Use of Tax-exempt Bonds in California by : Jon David Vasche
Download or read book The Use of Tax-exempt Bonds in California written by Jon David Vasche and published by . This book was released on 1982 with total page 412 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis State Fiscal Institutions and the U.S. Municipal Bond Market by : James M. Poterba
Download or read book State Fiscal Institutions and the U.S. Municipal Bond Market written by James M. Poterba and published by . This book was released on 1997 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents new evidence on the effect of state fiscal institutions, particularly balanced-budget rules and restrictions on state debt issuance, on the yields on state general obligation bonds. We analyze information from the Chubb Relative Value Survey, which contains relative tax-exempt yields on the bonds issued by different states over the period 1973-1996. We find that states with tighter anti-deficit rules, and more restrictive provisions on the authority of state legislatures to issue debt, pay lower interest rates on their bonds. The interest rate differential between a state with a very strict anti-deficit fiscal constitution, and one with a lax constitution, is between fifteen and twenty basis points. States with binding revenue limits tend to face higher borrowing rates by approximately the same amount, while states with expenditure limits face lower borrowing costs. Thus fiscal restraints that control expenditures are viewed favorably by bond market participants, while those that restrict taxes, and therefore might interfere with the state's ability to repay interest, result in higher borrowing costs. The effect of strict fiscal institutions is particularly evident when a state's economy is weak. These results provide important evidence that bond market participants consider fiscal institutions in assessing the risk characteristics of tax-exempt bonds, and further support the view that fiscal institutions have real effects on fiscal policy outcomes.
Book Synopsis The Purchasing of Tax-exempt Bonds by Individuals in the 1946-1956 Decade by : James M. Heidell
Download or read book The Purchasing of Tax-exempt Bonds by Individuals in the 1946-1956 Decade written by James M. Heidell and published by . This book was released on 1960 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt:
