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An in-state municipal bond has a yield of 5.20%. A corporate with identical characteristics has a yield of 8%. If an investor is in a

An in-state municipal bond has a yield of 5.20%. A corporate with identical characteristics has a yield of 8%. If an investor is in a federal tax bracket of 30%, and a state tax bracket of 5%, which bond would the investor choose?

a. Corporate Bond

b. Municipal Bond

c. Indifferent

Please show calculation ( not excel ) and explain why. Thank you.

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