Question: You are debating between adding two bonds to your portfolio. The first bond, is an Apple bond with ten years to maturity, a price of

 You are debating between adding two bonds to your portfolio. The

You are debating between adding two bonds to your portfolio. The first bond, is an Apple bond with ten years to maturity, a price of $500, zero coupon payments, and a face value of $1,000. The second bond is a tax-exempt bond issued by the state of Missouri with a yield to maturity of 4%. The before-tax yield to maturity of the first bond is and you should your tax rate is 40%, the after-tax yield of the first bond is prefer buying (a) 6.35%;3.81%; bond 2 (b) 7.18%;2.87%; bond 2 (c) 10.78%;4.31%; bond 2 (d) 7.18%;4.31%; bond 1

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