Question
Assume that Greg is in the 12% tax bracket, and Tony is in the 35% tax bracket. Both Greg and Tony are making investments that
Assume that Greg is in the 12% tax bracket, and Tony is in the 35% tax bracket. Both Greg and Tony are making investments that are not sheltered from taxes by being a part of any tax-advantaged retirement account, and they are comparing two bonds that are considered equally safe. One is a municipal bond yielding a 6.5% return. The other is a corporate bond yielding a 9% return. What should they do?
A. Both Greg and Tony should purchase the corporate bond. B. Greg should purchase the corporate bond, but Tony should purchase the municipal bond. C. Greg should purchase the municipal bond, but Tony should purchase the corporate bond. D. Both Greg and Tony should purchase the municipal bond.
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