Multiple Choice
Assume that Larry's marginal tax rate is 25%. If corporate bonds pay 10% interest, what interest rate would a municipal bond have to offer for Larry to be indifferent between the two bonds?
A) 25.00%.
B) 12.50%.
C) 10.00%.
D) 7.50%.
E) None of the choices are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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