A Corporate bond currently yield 8.00%. Municipal bound with the same risk, maturity, and liquidity currently yield

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A Corporate bond currently yield 8.00%. Municipal bound with the same risk, maturity, and liquidity currently yield 5.5%. At what tax rate would investors be indifferent between the two bonds?

28.75%

35.00%

31.25%

29.69%

30.94%

Related Book For answer-question

Modern Portfolio Theory and Investment Analysis

ISBN: 978-1118469941

9th edition

Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann

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Posted Date: Mar 01, 2019 02:36 AM

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A Corporate bond currently yield 8.00%. Municipal bound with the same risk, maturity, and liquidity currently yield

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Modern Portfolio Theory and Investment Analysis

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