What is the taxable equivalent yield on a 3%, tax-exempt municipal bond for a person in...

Question

Question

What is the taxable equivalent yield on a 3%, tax-exempt municipal bond for a person in the 35% tax bracket?

business finance

Answer 1

Answer #1

taxable equivalent yield=yield for tax-exempt municipal bond/(1-tax rate)

=3/(1-0.35)

which is equal to

=4.62%(Approx).

Answer 2

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