If a Fully-Taxable Bond Yields a BTROR of 8% (R_b

question 15

Multiple Choice

If a fully-taxable bond yields a BTROR of 8% (R_b = 8%) and a tax-exempt bond of similar risk earns a BTROR of 5% (R_f = 5%) ,then the implicit tax is

• A)3%.
• B)5%.
• C)8%.
• D)None of the above.

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