Question: 22 < Which bond will yield a higher after tax rate, a corporate bond with a coupon rate of 7% before taxes or a municipal

22<

Which bond will yield a higherafter tax rate,a corporate bond with a coupon rate of 7% before taxes or a municipal bond yielding a rate of 5%.

The investor is in the 35% tax bracket. What is the after-tax rate?

Municipal bond has higher after-tax rate; After tax rate of corporate bond is 2.45%

Corporate bond has higher after-tax rate; after-tax rate of corporate bond is 8.5%

Municipal bond has higher after-tax rate; after-tax rate of corporate bond is 4.55%

Corporate bond has higher after-tax rate, after-tax rate is 7%.

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