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Suppose an investor with a tax bracket of 25% has a choice between a corporate bond with a 7.5% coupon and a municipal bond with

Suppose an investor with a tax bracket of 25% has a choice between a corporate bond with a 7.5% coupon and a municipal bond with a 6.25% coupon. Assuming that the two bonds are of the same grade, the _____ bond is more attractive because the muni bonds equivalent taxable yield is _______.

A. corporate: 7.81%

B. corporate; 8.33%

C. muni; 7.81%

D. muni; 8.33%

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