Holding liquidity and default risk constant, an investor earning 4% from a tax-exempt bond who is in a 20% tax bracket would be indifferent between that bond and a taxable bone with a(n):
A) 7.5% yield.
B) 8.0% yield.
C) 5% yield.
D) 6% yield.

Question

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The Answer of Holding liquidity and default risk constant, an investor earning 4% from a tax-exempt bond who is in a 20% tax bracket would be indifferent between that bond and a taxable bone with a(n):
A) 7.5% yield.
B) 8.0% yield.
C) 5% yield.
D) 6% yield.

Holding Liquidity and Default Risk Constant, an Investor Earning 4