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What would be your highest marginal tax rate for you to prefer a corporate bond paying...

What would be your highest marginal tax rate for you to prefer a corporate bond paying 7.81% to a tax-exempt municipal bond paying 5%? Round your answer to 4 decimal places. For example, if your answer is 3.205%, then please write down 0.0321.

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Expert Solution

Corporate bond yield*(1 - Tax rate) = Municipal bond yield

7.81%*(1 - Tax rate) = 5%

(1 - Tax rate) = (5% / 7.81%)

Tax rate = 0.3598

jeff jeffy answered 2 years ago
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