Assume a corporate bond has the yield to maturity (YTM) of 10.2% and is taxable. Further assume that there is also a public bond that has the yield of maturity (YTM) of 7.7%. What is the marginal tax rate here?

A.) 53.56%

B.) 75.49%

C.) 24.51%

D.) 24.76%

Which of the following will be true if the tax rate is 15.43%?

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

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

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

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