Because of her income tax rate, Carla is indifferent between the purchase of a municipal bond with a 4.2 percent coupon rate and a corporate bond with a 6.0 percent coupon rate. If both bonds have otherwise equivalent characteristics and risk factors, Carla's income tax rate is
Select one:
A. 28%.
B. 30%.
C. 35%.
D. 42%.

Q&A Education