In 2006 agency corporate bonds sold at a yield of 5.32%, while high-grade tax-exempts of comparable maturity
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In 2006 agency corporate bonds sold at a yield of 5.32%, while high-grade tax-exempts of comparable maturity offered 3.7% annually. If an investor receives the same after-tax return from corporates and tax-exempts, what is that investor’s marginal rate of tax? What other factors might affect an investor’s choice between the two types of securities?
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