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Lakeside Corporation has some money to invest, and its treasurer is choosing between City of Chicago municipal bonds and U.S. Treasury bonds. Both have the same maturity, and they are equally risky and liquid. If Treasury bonds yield 6 percent, and Lakeside's marginal income tax rate is 40 percent, what yield on the Chicago municipal bonds would make Lakeside's treasurer indifferent between the two?

a. 2.40%

b. 3.60%

c. 4.50%

d. 5.25%

e. 6.00%

Basic Finance, Finance

  • Category:- Basic Finance
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