You are a taxpayer in the 24 percent tax bracket and you own a tax-exempt bond that pays 6 percent.What is your taxable equivalent yield?

Name: You are a taxpayer in the 24 percent tax bracket and you own a tax-exempt bond that pays 6 percent.What is your taxable equivalent yield?
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Question

Quizplus · Accepted Answer

The taxable equivalent yield is calculated as the tax-exempt yield divided by (1 - tax rate). So, for a 6 percent tax-exempt yield and a 24 percent tax bracket, the calculation is 6% / (1 - 0.24) = 7.89 percent.

You Are a Taxpayer in the 24 Percent Tax Bracket