Question
1)- A municipal bond selling at par currently yields 7.5%. A corporate bond selling at par currently yields 10%. At what marginal tax rate would
1)- A municipal bond selling at par currently yields 7.5%. A corporate bond selling at par currently yields 10%. At what marginal tax rate would an investor be indifferent between this two bonds?
2)- A corporate bond selling at par currently yields 7.5%. Amy's marginal tax rate is 20%. How much should a municipal bond selling at par yields so that Amy is indifferent between this two bonds?
3)- A municipal bond selling at par currently yields 6.5%. Bob's marginal tax rate is 20%.How much should a corporate bond selling at par yields so that Bob is indifferent between this two bonds?
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