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Calculating the bond indifference

Problem:

What formula should I use to calculate the bond indifference?

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

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Finance Basics: Calculating the bond indifference

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Finance Basics: Calculating the bond indifference

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