An investor in a 34% tax bracket would be indifferent between a corporate bond with a before-tax yield of 8% and a municipal bond with a yield of ________.

A) 3.91%
B) 6.15%
C) 5.28%
D) 10.72%

Municipal Bond

A debt security issued by a city, municipality, or county to finance its capital expenditures, typically offering tax-exempt interest payments.

Corporate Bond

A debt security issued by corporations to finance their operations, which promises to pay the holder a specified rate of interest and return the principal at maturity.

Tax Bracket

A range of incomes taxed at a certain rate within a tax system, where the tax rate typically increases as income rises.