Compare this yield to the 6.69​%, ​20-year, A-rated,​ tax-exempt municipal bond and explain which alternative is better.  ​(Select the best answer​ below.)
A.
The after dash tax yield of 9.49 % for the corporate bond is a better alternative than the 6.69 % tax dash free municipal bond at the 10​% tax rate.
B.
The 6.69 % tax dash free municipal bond is a better alternative than the after dash tax yield of 9.49 % for the corporate bond at the 10​% tax rate.

To compare the yields of the corporate bond and the tax-exempt municipal bond, we need to take into account the tax implications. The municipal bond is tax-free, while the corporate bond is taxable. Here's how to determine which option is better:

1. **Corporate Bond After-Tax Yield**:  
   The corporate bond has a given after-tax yield of 9.49%. This is the return after accounting for the 10% tax rate on the corporate bond.

2. **Municipal Bond Yield**:  
   The municipal bond's yield is 6.69%, and since it is tax-exempt, no further adjustments are needed.

### Comparison
- The after-tax yield of the corporate bond is **9.49%**.
- The tax-exempt yield of the municipal bond is **6.69%**.

Thus, **Option A** is correct:
- **The after-tax yield of 9.49% for the corporate bond is a better alternative than the 6.69% tax-free municipal bond at the 10% tax rate.** The corporate bond offers a higher effective return even after taxes.

Would you like further details or have any questions about this comparison? 

Here are 5 related questions you might consider:
1. How would a higher tax rate affect the comparison between these bonds?
2. What is the formula to calculate the after-tax yield of a taxable bond?
3. How does the duration of a bond impact its risk and yield?
4. What are the risks associated with investing in corporate bonds vs. municipal bonds?
5. How does credit rating influence the yield of corporate and municipal bonds?

**Tip:** When comparing bonds, always factor in both yield and tax implications to assess the true return on investment.

Compare this yield to the 6.69​%, ​20-year, A-rated,​ tax-exempt municipal bond and explain which alternative is better. A. The after-tax yield of 9.49% for the corporate bond is a better alternative than the 6.69% tax-free municipal bond at the 10​% tax rate. B. The 6.69% tax-free municipal bond is a better alternative than the after-tax yield of 9.49% for the corporate bond at the 10​% tax rate.

Understand how to compare a 9.49% after-tax yield for a corporate bond with a 6.69% tax-free municipal bond, factoring in the tax implications at a 10% rate. This problem explores key financial concepts such as bond yields and tax impact on investment returns, suitable for finance students and investors.

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