Question
For an individual who pays personal income taxes at a rate of 30 percent, which of the following statements is most correct? a. An investment
For an individual who pays personal income taxes at a rate of 30 percent, which of the following statements is most correct?
a. An investment in a tax-exempt (municipal) bond is always preferable to an investment in a taxable (corporate) bond.
b. An investment in a tax-exempt (municipal) bond is never preferable to an investment in a taxable (corporate) bond.
c. An investment in a tax-exempt (municipal) bond with an interest rate of 8 percent is preferable to an investment in a taxable (corporate) bond with an interest rate of 10 percent.
d. An investment in a tax-exempt (municipal) bond with an interest rate of 5 percent is preferable to an investment in a taxable (corporate) bond with an interest rate of 10 percent.
e. The individual will always be indifferent between an investment in a tax-exempt (municipal) bond and an investment in a taxable (corporate) bond.
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Capital Market Finance
Authors: Patrice Poncet, Roland Portait, Igor Toder
1st Edition
3030845982, 978-3030845988
