Part 1: You want to invest your $15,000 savings in one of the two options below:

1. Complete the following sentence: Assuming that both bonds are equally risky, at ____ tax rate, I would prefer to invest my money in Pfizer bonds *

a. 30%

b. 33%

c. 25%

d. 18%

e. None of the above

Part 2: Consider the following bonds:

1. The after-tax yield on municipal bond is equal to: *

a. $3,640

b. $5,600

c. $7,560

d. $8,200

e. None of the above

2. The after-tax yield on corporate bond is equal to: *

a. $5,600

b. $3,640

c. $8,200

d. $5,330

e. None of the above

3. Complete the following sentence: The investment in Municipal bonds would result in _________ ________ compared to the investment in C-bonds *

a. $4,560 loss

b. $2,600 loss

c. $1,690 profit

d. $270 profit

e. None of the above

Pfizer bonds yielding 9.2% Municipal bonds yielding 7.1% . Part 2: Consider the following bonds: Type Municipal bond Corporate bond Assume a 35% tax bracket. Par value $100,000 $100,000 Yield 5.6% 8.2%