Which statements about the equivalent taxable yield are correct? Define $t$ as the marginal tax rate, $r_{\text{m}\text{u}\text{n}\text{i}}$ as the rate on munis, and $r_{\text{t}\text{a}\text{x}\text{a}\text{b}\text{l}\text{e}}$ as the taxable rate.

It is higher than the rate on munis because munis are tax advantaged.

It is given by the equation $r_{\text{t}\text{a}\text{x}\text{a}\text{b}\text{l}\text{e}}=(1-t)r_{\text{m}\text{u}\text{n}\text{i}}.$

The tax advantage of munis makes them a "free lunch" in that they offer a higher after$-$tax return without more risk.

The cutoff tax bracket at which investors are indifferent between it and the muni rate is given by the expression $1-\frac{\text{r}\text{m}\text{u}\text{n}\text{i}}{\text{r}\text{t}\text{a}\text{x}\text{a}\text{a}\text{b}\text{l}\text{e}}.$