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 |
Calculation of Equivalent taxable yield
Equivalent taxable yield = Yield of bond / (1-tax rate)
Since the bond is trading at par, YTM and coupon rate will be same
So,
Equivalent taxable yield = 7 / (1-.35)
=10.77%
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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