Assume that you are in the 25 percent marginal tax bracket and that you have $5,000 to invest. You have narrowed your investment choices down to California bonds with a yield of 7 percent or equally risky ExxonMobil bonds with a yield of 10 percent. Which one should you choose and why? At what marginal tax rate would you be indifferent to the choice between California and ExxonMobil bonds?
Freda incurred a $20 000 capital gain during the year. She would like to reduce her capital gain by selling one of two stocks that are currently sitting at a capital loss. She purchased 10 000 shares in Sesame Inc. for $28 each. The shares are currently trading at $21. She also purchased 5000 shares in the Electric Co. for $33 each. These shares are currently trading at $25. Which shares should she
