An investor in the 33 percent tax bracket will buy a 6 percent municipal bond rather than a similarly rated 8.5 percent corporate bond.

Name: An investor in the 33 percent tax bracket will buy a 6 percent municipal bond rather than a similarly rated 8.5 percent corporate bond.
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Question

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Municipal bonds are often tax-exempt, so the after-tax yield for the investor in the 33 percent tax bracket would be higher for the 6 percent municipal bond compared to the 8.5 percent corporate bond, which is subject to taxes.

An Investor in the 33 Percent Tax Bracket Will Buy