1. Suppose an investor is considering a corporate bond with a 7.17% before-tax yield and a municipal bond with a 5.93% before-tax yield. At what marginal tax rate would the investor be indifferent between investing in the corporate and investing in the municipal bond?
12.4%
23.7%
17.3%
15.4%
2. Over the past year you earned a nominal rate of interest of 8 percent on your money. The inflation rate was 3.5 percent over the same period. What is the exact real rate of return that was earned?
4.35%
4.50%
4.15%
4.65%