Emily is in the 10% marginal income tax bracket and earned a 2.5% return on the corporate bonds that just matured. The nominal interest rate paid on these bonds was

Name: Emily is in the 10% marginal income tax bracket and earned a 2.5% return on the corporate bonds that just matured. The nominal interest rate paid on these bonds was
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Question

Quizplus · Accepted Answer

The nominal interest rate is calculated by dividing the after-tax return by (1 - tax rate). Here, 2.5% / (1 - 0.10) = 2.78%.

Emily Is in the 10% Marginal Income Tax Bracket and Earned