You are analyzing YTM on a 3-year Treasury Bond vs. 3-year Municipal Bond.
Both contracts promise to pay FV = 1,000 and currently trade at PV = 1,000; however, T-Bond offers 10% coupon rate, and Municipal Bond offers only 8% coupon rate.
As it turns out, the Wall Street Journal (WSJ) and all other business outlets announced today that the United States Government decided to lower the federal level marginal income tax rate from current 35% to 25% effective tomorrow. Ceteris paribus, giving the above breaking news you anticipate a(an) ______ in demand for these 3-yr T-Bonds and associated with it a(an)______ pressure on equilibrium quantity of T-Bonds, a(an)_____ pressure on equilibrium price of T-Bonds, and a(an)_____ pressure on equilibrium YTM on T-Bonds.
Please provide any calculations you may seem necessary to illustrate the nature of the changes.