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Which Bond Would Someone in a 35% Tax Bracket Choose

question 73

Essay

Which bond would someone in a 35% tax bracket choose to buy: a municipal bond with an interest rate of 7% or a corporate bond with an interest rate of 10%?


Definitions:

Other Comprehensive Income

Revenues, expenses, gains, and losses that are not included in net income, but affect shareholders' equity.

Unrealized Loss

A decline in worth due to the possession of an asset that has depreciated in value, yet remains unsold.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, are subtracted from total revenue.

Dividends Paid

The portion of a company's earnings distributed to shareholders as a reward for their investment.

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