Bond would an investor prefer if her marginal tax rate

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A corporate bond issued by Gordon Inc. currently yields 4%. A municipal bond issued by Wenham, of equal risk, currently yields 3%.

(a) At what marginal tax rate would an investor be indifferent between these two bonds?

(b) Which bond would an investor prefer if her marginal tax rate is lower than in (a)? Explain.

Reference no: EM131826406

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