If a Fully-Taxable Bond Yields a BTROR of 10% (R_b

question 22

Multiple Choice

If a fully-taxable bond yields a BTROR of 10% (R_b = 10%) and a tax-exempt bond of similar risk earns a BTROR of 7.5% (R_f = 7.5%) ,then the implicit tax rate is

• A)25%.
• B)75%.
• C)10%.
• D)none of the above.

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