An investor in the 28 percent tax bracket is trying to decide which of two bonds to

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An investor in the 28 percent tax bracket is trying to decide which of two bonds to purchase.

One is a corporate bond carrying an 8 percent coupon and selling at par. The other is a municipal bond with a 5 percent coupon, and it, too, sells at par. Assuming all other relevant factors are equal, which bond should the investor choose?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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Personal Financial Planning

ISBN: 978-1111971632

13th edition

Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley

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