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Holding liquidity and default risk constant, an investor earning 6% from a tax-exempt bond who is in a 25% tax bracket would be indifferent between
Holding liquidity and default risk constant, an investor earning 6% from a tax-exempt bond who is in a 25% tax bracket would be indifferent between that bond and a taxable bond with a(n):
a. 8% yield.
b. 4.5% yield.
c. 6.25% yield.
d. 7.5% yield.
please show your work, thank you.
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