At What Point Would an Investor Be Indifferent Between a GM

question 25

Multiple Choice

At what point would an investor be indifferent between a GM corporate bond yielding 9.5 percent and a tax-free municipal bond of equal financial strength if the investor's marginal tax rate is 25 percent?

• A) 7.13%
• B) 7.60%
• C) 11.87%
• D) 12.67%
• E) 14.27%

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Definitions:

Know

To be aware of through observation, inquiry, or information; to have knowledge or understanding of something.

News

Information about recent events or happenings, especially as reported by newspapers, websites, radio, or television.

Suppose

To assume or consider something to be true without proof.

They're

A contraction of "they are" used as a subject pronoun followed by the verb "to be" in its plural form.