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Amy and Bob are comparing a municipal bond that offers a 4.40 percent yield to maturity and a similar risk corporate bond that offers a
Amy and Bob are comparing a municipal bond that offers a 4.40 percent yield to maturity and a similar risk corporate bond that offers a 6.75 percent yield. Amy is in the 28 percent federal tax bracket and pays a 9 percent state tax rate while Bob is in the 25 percent federal tax bracket and pays a 8 percent state tax rate. Assume they reside in the state where the municipal bond is issued. Which bond will give Amy and Bob more profit after taxes? The corporate bond for both Amy and Bob The municipal bond for both Amy and Bob There is no difference between the two bonds for Amy and Bob. The corporate bond for Amy and the municipal bond for Bob The municipal bond for Amy and the corporate bond for Bob
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