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A Tax Free Municipal Bond Pays an Effective Annual Rate

Question 61

Multiple Choice

A tax free municipal bond pays an effective annual rate of 7.2%.If your tax rate is 30%,then the effective annual rate that a comparable corporate bond would have to offer you an equivalent after tax return would be closest to:


A) 5.0%
B) 7.2%
C) 9.4%
D) 10.3%

Correct Answer:

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