Answer:
30%
Explanation:
The computation of the after tax yield of the taxable bond in the case when the tax bracket is 30%
= rate × (1 - tax rate)
= 5% × (1 - 0.30)
= 5% × 0.70
= 3.50%
As we can see that the short term municipal bond is 4%
So this tax bracket should be chosen as the short term municipal bond gives higher after tax yield
