A municipal bond-what is the investor tax rate

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Reference no: EM131825008

1. A municipal bond, which is not taxed, offers a 5.4% annual rate of return. A corporate bond, which is taxed, offers a 9% annual rate of return. If these bonds have the same after-tax return for an investor, what is the investor's tax rate?

33.3% 40% 60% 4%

2. Which would you rather invest in:

A savings account paying 6% compounded annually

A savings account paying 6% compounded daily?

Why 'a' or 'b' and show your math?

Reference no: EM131825008

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