Muddy Ruel is considering purchasing one of two bonds a corporate bond with a 9 coupon interest rate, selling at par, or a tax free municipal bond with a 6 coupon interest rate, selling at par Given that Muddy is in the 30 tax bracket, and assuming that all other relevant factors are the same between the two bonds, which bond should Muddy select

Question: Muddy Ruel is considering purchasing one of two bonds: a corporate bond with a 9% coupon interest rate, selling at par, or a tax-free municipal

Muddy Ruel is considering purchasing one of two bonds: a corporate bond with a 9% interest rate, selling at par, or a tax-free municipal bond with a 6% interest rate, selling at par. Given that Muddy is in the 30% tax bracket, and assuming that all other relevant factors are the same between the two bonds, which bond should Muddy select?

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