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 6% and 8%, respectively. If the investor is in the 25% marginal tax bracket, his or her after-tax rates of return on the municipal and corporate bonds would be ________ and ______, respectively.

A) 6%; 8%
B) 4.5%; 6%
C) 4.5%; 8%
D) 6%; 6%