Buy the corporate bond since the break-even tax rate

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A corporate bond is paying 8% and a municipal bond of similar risk is paying 5.5%, which would you prefer if you were currently in the 32% tax bracket: a) Buy the corporate bond since the break-even tax rate is 68.75% which is greater than our tax rate of 32%, b) a) Buy the corporate bond since the break-even tax rate is 68.75% which is greater than our tax rate of 32%. c) Buy the corporate bond since the break-even tax rate is 31.25% which is less than our tax rate of 32%. d)Buy the corporate bond since the break-even tax rate is 45.45% which is greater than our tax rate of 32%. e) Buy the municipal bond since the break-even tax rate is 45.45% which is greater than our tax rate of 32%.

Reference no: EM13835084

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