A municipal bond carries a coupon rate of 7.35% and is trading at par. The equivalent taxable yield of this bond to an investor in a 30% tax bracket is ___(i)____. This investor wants to pursue higher yield. Suppose there is another corporate bond with a yield equal to 11.5%, then this investors will decide to invest in ___(ii)___.

(i) (ii)

A) 10.5% the municipal bond

B) 10.5% the corporate bond

C) 12.5% the municipal bond

D) 12.5% the corporate bond