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5. Treasuries are exempt from state taxes but you must pay federal tax on them. Municipal bonds are exempt from federal taxes and generally from

5. Treasuries are exempt from state taxes but you must pay federal tax on them. Municipal bonds are exempt from federal taxes and generally from state taxes in the state of issuance. a. Suppose your federal tax bracket is 40%. Which is the better deal, a treasury yielding 8% or a CT-bond yielding 6%? b. What if your federal tax bracket is 20%?

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