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This post addresses tax yields and related issues.

1. Do investors in high tax brackets or those in low tax brackets benefit more from tax-exempt securities?
2. Do municipal bonds or corporate bonds offer a higher before-tax yield at a given point in time? Which has the higher after-tax yield?
3. If taxes did not exist, would Treasury bonds offer a higher or lower yield than municipal bonds with the same maturity?

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1. Investors in high tax brackets would benefit more from tax-exempt securities than those in low tax brackets. The investors in high tax brackets have a higher tax liability, and the tax-exempt security would not add to their already high liability. They would benefit the most from any tax-exempt security. The investors in the low tax bracket would ...

Solution Summary

This solution answers the three following questions:

1. Do investors in high tax brackets or those in low tax brackets benefit more from tax-exempt securities?
2. Do municipal bonds or corporate bonds offer a higher before-tax yield at a given point in time? Which has the higher after-tax yield?
3. If taxes did not exist, would Treasury bonds offer a higher or lower yield than municipal bonds with the same maturity?

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