A municipal bond carries a coupon rate of 7.00% and is trading at par. |
What would be the equivalent taxable yield of this bond to a taxpayer in a 35% tax bracket? (Round your answer to 2 decimal places.) Equivalent taxable yield % |
MUNICIPAL BONDS ARE TAX EXEMPT.
IF SOMEONE PURCHASES BOND, WHICH IS TAXABLE
THEN
EQUIVALENT TAXABLE YIELD FOR SUCH BOND = COUPON ON MUNICIPAL BOND/(1- TAX RATE)
EQUIVALENT TAXABLE YIELD FOR SUCH BOND = 7%/(1-0.35) = 10.7692% = 10.77%
ANSWER: 10.77% (Thumbs up please)
A municipal bond carries a coupon rate of 7.00% and is trading at par. What would...
A municipal bond carries a coupon rate of 7.00% and is trading at par. What would be the equivalent taxable yield of this bond to a taxpayer in a 35% tax bracket? (Round your answer to 2 decimal places.) Equivalent taxable yield
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