An investor purchases one municipal and one corporate bond that pay rates of return of 8.5% and
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Question:
An investor purchases one municipal and one corporate bond that pay rates of return of 8.5% and 12.3%, respectively. If the investor is in the 35% marginal tax bracket, his or her after-tax rates of return on the municipal and corporate bonds would be
a.
8.25% and 7.73% respectively.
b.
5.63% and 7.73% respectively.
c.
8.5% and 10.3% respectively.
d.
8.5% and 8% respectively.
e.
10% and 10% respectively.
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