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7. A taxable bond has a yield of 8%, and a municipal bond has a yield of 6%. If you are in a 20% tax

7. A taxable bond has a yield of 8%, and a municipal bond has a yield of 6%.

  • If you are in a 20% tax bracket, which bond do you prefer?
  • At what tax rate would you be indifferent between the two bonds?

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