What are municipal bonds?

These are questions from a Financial Institutions and Markets class

1. We are purchasing a 28-day Treasury bill, during a normal year (non-leap year), and want to find out both the discount rate and the investment rate. If we purchase the bill for $998, what are the two rates? If we purchase a 91 day Treasury bill for $995, what are the two rates? (Show all work/calculations/formulas.)

2. What are municipal bonds? We are comparing the equivalent tax-free rate of two investments: 1) A taxable corporate bond that is at a rate of 10%, with a marginal tax of 30%, and 2) A tax-free municipal bond that is at a rate of 8%. Which of the two investments offers a better return considering the tax impact? (Show all work/calculations/formulas.)