Question
Imagine you have a choice of buying two bonds. 1) a corporate bond, fully taxable which pays 8% coupon and 2) a tax-exempt municipal bond
Imagine you have a choice of buying two bonds. 1) a corporate bond, fully taxable which pays 8% coupon and 2) a tax-exempt municipal bond which pays 6.4% coupon. Your marginal tax rate is 20%. Which bond do you prefer and why?
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Multinational financial management
Authors: Alan c. Shapiro
10th edition
9781118801161, 1118572386, 1118801164, 978-1118572382
