You own a corporate bond, which is yielding 4.9%. What is your aftertax yield if your marginal tax rate is 28%?

Name: You own a corporate bond, which is yielding 4.9%. What is your aftertax yield if your marginal tax rate is 28%?
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Question

Quizplus · Accepted Answer

To calculate aftertax yield, we need to find the aftertax portion of the yield.
Aftertax portion = Yield*(1-Marginal tax rate)
= 4.9%*(1-0.28)
= 3.53%
Therefore, the aftertax yield is 3.53%. Choice B is the correct answer.

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