Assume that tax-exempt bonds are being issued at a cost of 0.12 and riskequivalent taxables at 0.18.

a. Consistent with the above returns, what is the personal tax rate of the marginal investor?

b. An investor in tax exempts in the 58-percent tax bracket would earn the equivalent of what before-tax return?

c. If $10 billion of tax-exempt securities are issued, the annual interest savings to the issuing authorities are _______________.