$$UUESTION $1$

$2\mathrm{.}5$ points

A corporate bond currently yields $8\mathrm{.}5\%.$ Municipal bonds with the same risk, maturity, and liquidity currently yield $5\mathrm{.}5\%.$ At what tax rate would investors be indifferent between the two bonds?

a$.37\mathrm{.}06\%$

b$.38\mathrm{.}91\%$

c$.42\mathrm{.}90\%$

d$.35\mathrm{.}29\%$

e$.40\mathrm{.}86\%$