Answer either one of the questions below, or diversify your portfolio by answering both.
If you answer both, we will grade both and assign each question half of the 20% for this part.
If you answer only one, that one you answer will get the full 20%.
Please be sure it is clear to us which question(s) you want to be graded.
If the TA cannot figure it out on her own, she will grade both.
loan of $1,000,000 at 6% interest when the market yield on corporate bonds is 6% and on otherwise identical municipal
bonds is 4%, and Borrower A faces a marginal tax rate of 30% while Borrower B faces a marginal tax rate of 35%.
