Assume a corporate bond has the yield to maturity (YTM) of 10.5% and is taxable. Further assume that there is also a public bond that has the yield of maturity (YTM) of 7.8%. What is the marginal tax rate here?

Group of answer choices

31.28%

74.29%

25.71%

68.72%

Same facts as Question 8: which of the following will be true if the tax rate is 19.88%?

Group of answer choices

The investor will prefer government bonds since it is free of taxation.

The investor will prefer government bonds since the after-tax payoff will be higher.

The investor will prefer corporate bonds since it is free of taxation.

The investor will prefer corporate bonds because the after-tax payoff will be higher