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Explain the five-year corporate bond

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Reference no: EM133121200

Consider the decision to purchase either a five-year corporate bond or a five year municipal bond. The corporate bond has a 15% annual coupon bond with a par value of $1,200 with a current yield of 12%. The municipal bond has 10% annual coupon and a par value of $1,200 that is currently yielding at 8%. Which of the two bond will be more beneficial to you? Assume that your marginal tax rate is 35%.

Reference no: EM133121200

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