e. Which security is a better buy?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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6. The yield on a corporate bond is 10%, and it is cur-
rently selling at par. The marginal tax rate is 20%. A
par value municipal bond with a coupon rate of 8.50%
is available. Which security is a better buy?
Transcribed Image Text:6. The yield on a corporate bond is 10%, and it is cur- rently selling at par. The marginal tax rate is 20%. A par value municipal bond with a coupon rate of 8.50% is available. Which security is a better buy?
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