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Calculate the after-tax return of a 12.66 percent, 20-year, A-rated corporate bond for an investor in the 10 percent marginal tax bracket. Compare this yield
Calculate the after-tax return of a 12.66 percent, 20-year, A-rated corporate bond for an investor in the 10 percent marginal tax bracket. Compare this yield to a 11.94 percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 35 percent marginal tax bracket.
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