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(1) A corporate bond has a yield to maturity of 8%. A municipal bond with similar risk has a yield to maturity of 6%. Assuming

(1) A corporate bond has a yield to maturity of 8%. A municipal bond with similar risk has a yield to maturity of 6%. Assuming your marginal tax rate is 30%, which one do you prefer?

(2) Suppose the rate on a corporate bond is 9% and the rate on a municipal bond is 6.75%. Which should you choose?

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