Why might the corporate bond be preferred over the muni

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An investor in the 35% tax bracket may purchase a fifteen year maturity corporate bond that is AA rated. The bond yields 9 percent. The investor may also buy a fifteen year maturity AA rated municipal general obligation bond with a 5.85 percent yield. Why might the corporate bond be preferred over the muni? 1.The project supporting revenue for the muni bond may have financial problems. 2.The investor may be anticipating a significant decline in his income over the next few years. 3.The investor actively trades bonds and the secondary market for this corporate bond happens to be much more active than the secondary market for the muni. 4.The net yield is higher on the corporate bond Select one: a. 1 and 2 b. 2 and 3 c. 2 and 4 d. 2 only.

Reference no: EM131338705

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