Company''s bordering federal tax rate

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Reggie White, a corporate treasurer is practicing to decide which two 1-year securities to purchase a negotiable CD with nominal yield of 6 percent or a municipal security with a nominal yield of 4.5 percent. The issuing municipality isn't in the same state as Reggie's company, however he recognizes the muni's interest is excused from federal taxation. His company's bordering federal tax rate is 39 percent. Which security must the treasurer select assuming the securities have equal default risk?

Reference no: EM13103666

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