Question
A). Corporate bonds offer a pre-tax yield of 4%; similar risk municipals offer a yield of 2.5%. What is the marginal tax rate of the
A). Corporate bonds offer a pre-tax yield of 4%; similar risk municipals offer a yield of 2.5%. What is the marginal tax rate of the investor who is indifferent between investing in either?
B). If your marginal tax rate is 40%, which bond will you prefer to invest in?
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Risk Management And Financial Institution
Authors: John C. Hull
2nd Edition
0136102956, 9780136102953
