A 7.0 percent coupon bond issued by the State of Tennessee sells for $1,000.What coupon rate on a corporate bond selling at $1,000 par value would produce the same after tax return to the investor as the municipal bond if the investor is in the 29 percent marginal tax bracket?
A) 7.59%
B) 12.25%
C) 9.86%
D) 14.63%
E) 30.71%
Correct Answer:
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