In Order to Compare the Yields on Municipal and Corporate

Multiple Choice

In order to compare the yields on municipal and corporate bonds the investor must restate the yield of either the taxable corporate bond to an after tax basis or the municipal bond to a pretax equivalent because:

A) corporate bonds are tax free.
B) municipal bonds are tax free and investors must compare rates on an equal basis.
C) a municipal bond is typically safer than a taxable corporate bond.
D) such restatements are not necessary for most taxpayers.