The Wesson Wisconsin State Bank has purchased a bank-qualified municipal bond with a coupon rate of 7.5%.The bank had to borrow funds to make this purchase at a cost of 6%.The bank is in the 25% tax bracket.What is the net after-tax return on this bank-qualified municipal bond?
A) 7.5%
B) 2.7%
C) 3.0%
D) 1.5%
E) None of the options is correct
Correct Answer:
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