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Consider the following two bonds. A 3-year bond issued by GE with a yield of 5.4% is trading at par. A 3-year bond issued by
Consider the following two bonds.
A 3-year bond issued by GE with a yield of 5.4% is trading at par.
A 3-year bond issued by the state of NJ has a yield of 4.3% and is also trading at par.
Suppose the marginal tax rate is 25%. which bond will be preferred to buy?
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