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Economics Suppose that the interest rate on one-year municipal discount bonds is 9 percent and the average income tax rate for the bond market investors

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Economics Suppose that the interest rate on one-year municipal discount bonds is 9 percent and the average income tax rate for the bond market investors like you and I is 25 percent. This means that, due to arbitrage, the after-tax interest rate on one-year Treasury discount bonds will be percent and the after-tax interest rate on one-year municipal discount bonds will be percent

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