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Suppose you are choosing between the following two bonds Type Price Coupon Rate YTM Rating Callable Payment Frequency Muni $1055 1.800% 1.500% AA No Semi-annual
Suppose you are choosing between the following two bonds Type Price Coupon Rate YTM Rating Callable Payment Frequency Muni $1055 1.800% 1.500% AA No Semi-annual Corporate $1100 2.600% 2.100% AA Yes Semi-annual Which of the following is true? A. Not enough information to determine B. You always prefer a municipal bond because of the tax advantage C. At a tax rate of 30%, you prefer the municipal bond. (Hint: calculate the after-tax return on the taxable bond.) D. At a tax rate of 30%, you prefer the corporate bond
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