Recent hire with a financial firm

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As a recent hire with a Financial Firm, you have been asked by one of your customers, who is in 30% marginal tax bracket to make specific recommendations about the following two investment choices that have the same amount of risk:

1 A 4.5% Tax Free Municipal Bond.

2 A 6.5% Corporate Bond.

Your advice to the Customer is to:

a. Buy both the Bonds as both are offering good yields.

b. Buy Stock rather than Bonds because Stocks perform better than Bonds.

c. Buy Tax Free Municipal Bonds for the its yielding higher tax free yield than Corp. Bond.

d. Buy Municipal Bond because it is Tax Free.

e. Buy Corp Bond because its after Tax yield is higher than tax free Bond.

Reference no: EM132194720

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