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The break-even tax rate between a corporate bond and a comparable nontaxable municipal bond is 23%. If the municipal bond has a yield of 4.2%,
The break-even tax rate between a corporate bond and a comparable nontaxable municipal bond is 23%. If the municipal bond has a yield of 4.2%, a) What is the yield of the corporate bond? b) If the actual tax rate is 13%, which bond would you prefer buying?
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