A rise in the marginal tax rate will make high coupon _______ more attractive relative to high coupon _______.

Question

Quizplus · Accepted Answer

A rise in the marginal tax rate makes high coupon municipal bonds more attractive relative to high coupon corporate bonds because the interest income from municipal bonds is often exempt from federal income taxes, and sometimes from state and local taxes as well, making them more appealing to investors in higher tax brackets.

A Rise in the Marginal Tax Rate Will Make High