Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 3.9 percent for an investor in the 35 percent marginal tax bracket?
A)1.09%
B)3.90%
C)6.00%
D)11.14%

Question

Quizplus · Accepted Answer

The taxable equivalent yield is calculated by dividing the municipal bond yield by (1 - tax rate). So, 3.9% / (1 - 0.35) = 6.00%.

Taxable Equivalent Yield What's the Taxable Equivalent Yield on a Municipal