A corporate bond is yielding 9%. You are in the 35% tax bracket. What is the after tax yield on the bond?

Name: A corporate bond is yielding 9%. You are in the 35% tax bracket. What is the after tax yield on the bond?
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Question

Quizplus · Accepted Answer

The after-tax yield on the bond is calculated as the yield on the bond (9%) minus the yield lost to taxes. Since the tax bracket is 35%, the yield lost to taxes is 9% * 35% = 3.15%. Therefore, the after-tax yield is 9% - 3.15% = 5.85%.

A Corporate Bond Is Yielding 9