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A municipal bond has a 4% coupon while a corporate bond of equal credit quality has a 6% coupon. Which would be better for an

  1. A municipal bond has a 4% coupon while a corporate bond of equal credit quality has a 6% coupon. Which would be better for an investor in the 24% tax bracket?
    1. The corporate because its coupon is higher than the munis taxable equivalent yield?
    2. The municipal because its taxable equivalent yield to 5.26%?

Can someone explain how they got the correct answer as well. Thank you.

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