Calculate the after-tax return of a 6.65 percent, 20-year, A-rated corporate bond for an investor in the
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Calculate the after-tax return of a 6.65 percent, 20-year, A-rated corporate bond for an investor in the 15 percent marginal tax bracket. Compare this yield to a 5.25 percent, 20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. Repeat the calculations and comparison for an investor in the 33 percent marginal tax bracket.
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