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    Bond Analysis: Muni Bond Yield

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    At what point would an investor be indifferent between a corporate bond yielding 10.8 percent and a tax-free municipal bond of equal financial strength if the investor's marginal tax rate is 25 percent? (i.e. what would the yield be on the muni bond at the point where the investor is indifferent between the muni and the cooperate bond?)

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    Solution Preview

    The yield on the muni bond should be the same as the after tax yield on the corporate ...

    Solution Summary

    In this solution, we analyze the given muni bond.