A 5-year corporate bond yields 10.70%. A 5-year municipal bond of equal risk yields 6.50%. Assume that the state tax rate is zero. At what federal tax rate are you indifferent between the two bonds? (Round your final answer to two decimal places.)
A. 40.04%
B. 34.93%
C. 34.15%
D. 47.50%
E. 39.25%
Answer: E
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