State whether you agree or disagree with the statement below. Explain you answer. "If the...
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Finance
State whether you agree or disagree with the statement below. Explain you answer. "If the highest marginal income tax rate increases, yields of tax-exempt municipal bonds should increase relative to yields of taxable corporate bonds, all else equal."
Hint: Would tax-exempt bonds become more or less attractive to investors in the highest tax brackets when these investors start getting taxed at higher rates? If a tax benefit of Investing in a tax-exempt security increases, would investors be willing to accept a lower before-tax yield on such a security?
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