In 2006 agency corporate bonds sold at a yield of 5.32%, while high-grade tax-exempts of comparable maturity

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In 2006 agency corporate bonds sold at a yield of 5.32%, while high-grade tax-exempts of comparable offered 3.7% annually. If an investor receives the same after-tax return from corporates and tax-exempts, what is that investor’s marginal rate of tax? What other factors might affect an investor’s choice between the two types of securities?

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Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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Principles of Corporate Finance

ISBN: 978-0077404895

10th Edition

Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen

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Question Posted: Dec 31, 2012 09:54 AM

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In 2006 agency corporate bonds sold at a yield of 5.32%, while high-grade tax-exempts of comparable maturity

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Principles of Corporate Finance

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