1. Would a lump sum or the comparable amount in periodic payments deposited over time provide a higher future value? Why?
2. Suppose that you must choose between the following two bonds trading at par. A taxable 10-year Treasury Note yielding 5%, and a tax exempt 10-year Texas Municipal Note yielding 3.5%. If you expect to have a marginal tax rate of 30%, then you should purchase ____________.
A. the Treasury Note.
B. the Texas muni.
C. either bond
D. neither bond