Sunita wants to earn the highest possible after-tax return on her savings. She has two options: a
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Sunita wants to earn the highest possible after-tax return on her savings. She has two options:
a corporate bond and a tax-free government bond. The corporate bond yields 5%, and Sunita is in the 25% marginal tax bracket. What equivalent tax-free rate would a government bond need to have to make her indifferent between the corporate bond and the government bond?
a. 5.25%
b. 4.00%
c. 3.75%
d. 2.75%
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Related Book For
Money, Banking, Financial Markets and Institutions
ISBN: 978-0538748575
1st edition
Authors: Michael Brandl
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