Stacey faces a 15% tax rate on interest income. She can buy a $100 face value corporate bond yielding 12.5% ($12.5) annually for $100 or a municipal bond yielding $12.5 annually. Both bond issues have similar maturities and risk. How much is she willing to pay for the municipal bond.

Answer rating: 100% (QA)

Stacey is comparing two bonds a corporate bond and a municipal bondboth with a face value of 100 and ... View the full answer