An Investor Purchases One Municipal and One Corporate Bond That

Multiple Choice

An investor purchases one municipal and one corporate bond that pay rates of return of 7.2% and 9.1%, respectively. If the investor is in the 12% marginal tax bracket, his or her after-tax rates of return on the municipal and corporate bonds would be ________ and ______, respectively.

A) 7.2%; 9.1%
B) 7.2%; 8.008%
C) 6.12%; 7.735%
D) 8.471%; 9.1%