A corporate bond currently yields 85 municipal bonds with


A corporate bond currently yields 8.5%. Municipal bonds with the same risk, maturity, and liquidity currently yield 5.5%. At what tax rate would investors be indifferent between the two bonds?

a. 38.91%

b.  37.06%

c. 40.86%

d. 42.90%

e. 35.29%

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Financial Management: A corporate bond currently yields 85 municipal bonds with
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