5. Emily is in the 35% marginal tax bracket. She can purchase a York County school bond yielding 3. 5% interest, which is not subject to a 5 % state tax. But she is interested in earning a higher return for comparable risk. explain your work

Which of the following is correct:

1. If she buys a corporate bond that pays 6% interest, her after-tax rate of return will be less than if she had purchased the York County school bond.

2. If she buys a U.S. government bond paying 5%, her after-tax rate of return will be less than if she had purchased the York County school bond.

3. If she buys a common stock paying a 4 % dividend, after-tax rate of return will be higher than if she had purchased the York County school bond.

4. All of these are correct.

5. None of these is correct