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Lester Is Considering a Municipal Bond Yielding 5

Question 105

Multiple Choice

Lester is considering a municipal bond yielding 5.5 percent and a corporate bond yielding 8.2 percent.His marginal tax rate is 28 percent.He should invest in the ________ bond because the critical marginal tax rate is ________ percent.


A) corporate; 26
B) corporate; 29
C) corporate; 33
D) municipal; 35
E) municipal; 37

Correct Answer:

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