Series 53 - Municipal Securities Principal Practice Questions

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municipal securities products, pricing, and taxation

A customer in a high tax bracket is comparing a 3.25% tax-exempt municipal bond yield to a 5.00% taxable corporate bond yield. Without performing a full calculation, which general conclusion is MOST accurate?

Choose one answer, check it, then continue.

Answer choices

The taxable bond always provides the higher after-tax return because its nominal yield is higher

The municipal bond may provide a higher after-tax return depending on the customer’s marginal tax rate

The municipal bond always provides the higher after-tax return because it is tax-exempt

After-tax return cannot be compared because municipal bonds have no credit risk

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Series 53 - Municipal Securities Principal practice questions

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