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Question(s) / Instruction(s):

A 5-year corporate bond yields 9%.  A 5-year municipal bond of equal risk yields 6.5%.  Assume that the state tax rate is zero. At what federal tax rate are you indifferent between the two bonds?

a)      27.78%

b)      29.17%

c)       33.76%

d)      30.63%

e)      32.16%

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