Assume that there are two investors: one is retired and has a marginal tax rate of 15%, the other is wealthy and has a marginal tax rate of 39.6%. Each investor can choose to invest in either the corporate or municipal bond. Which investment does each take? Assume each taxpayer invests $100,000. What are their after-tax rates of return on each investment.

Answer rating: 100% (QA)

Corporate bond Interest rate 5 Interest income 5000 Taxable as ordinary inco... View the full answer