Investing in the corporate and municipal bond

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Reference no: EM131813102

1. Suppose an investor is considering a corporate bond with a 7.17% before-tax yield and a municipal bond with a 5.93% before-tax yield. At what marginal tax rate would the investor be indifferent between investing in the corporate and investing in the municipal bond?

12.4%

23.7%

17.3%

15.4%

2. Over the past year you earned a nominal rate of interest of 8 percent on your money. The inflation rate was 3.5 percent over the same period. What is the exact real rate of return that was earned?

4.35%

4.50%

4.15%

4.65%

Reference no: EM131813102

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