Use to buy shares in mutual fund

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Extra: Glen and Maggie have received a gift of S5,000, which they would like to use to buy shares in a mutual fund. They are in the 15% bracket for federal income tax, and they pay no state or local income taxes. Should they purchase shares in a tax-free municipal bond fund that pays 4% interest or in a high quality corporate bond fund that pays 6% interest? Assume ave s only difference between them is that the interest from the municipal bond fund is tax deductible, whereas the higher interest from the corporate bond fund is not.

Reference no: EM131859602

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