Question
A municipal bond has yield to maturity of 3.94 percent while a comparable corporate bond has yield to maturity of 5.33 percent. Which of these
A municipal bond has yield to maturity of 3.94 percent while a comparable corporate bond has yield to maturity of 5.33 percent. Which of these two bonds will an investor with a marginal tax rate of 25 percent choose to invest in?
Group of answer choices
The municipal bond because it offers the investor a higher after-tax yield to maturity than the corporate bond.
The corporate bond because it offers the investor a higher nominal yield to maturity than the municipal bond.
The municipal because it offers the investor a higher nominal yield to maturity than the corporate bond.
The corporate bond because it offers the investor a higher after-tax yield to maturity than the municipal bond.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
10th Edition
978-0538482387
