Suppose the yields on tax-exempt local government bonds in Problem 9 initially were below the Treasury yields
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Suppose the yields on tax-exempt local government bonds in Problem 9 initially were below the Treasury yields of the same maturity. If the tax-exempt status were then removed from the local government bonds, would you expect their yields spreads versus treasuries to narrow, to disappear, or change sign? Explain your answer.
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Money Banking And Financial Markets
ISBN: 9781260226782
6th Edition
Authors: Stephen Cecchetti, Kermit Schoenholtz
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