If you are in a 30% tax bracket, which bond would you prefer a taxable bond with a yield of 7.5% or a municipal bond paying 6.0%.

Group of answer choices

The taxable bond with a 7.5% yield

Either -- you would be indifferent

The municipal bond with a 6.0% yield

Find a zero coupon that pays 7.5% because it is not taxed as there are no cash payments until the end.