In comparing municipal bonds to other taxable bonds,the comparison must be between equivalent taxable yields.

Question

Quizplus · Accepted Answer

When comparing municipal bonds to other taxable bonds, you need to compare the equivalent taxable yield. This is because the interest income from municipal bonds is typically tax-free at the federal level and may also be exempt from state and local taxes. Therefore, to compare the returns of municipal bonds to taxable bonds, you need to calculate the equivalent taxable yield of the municipal bond.

In Comparing Municipal Bonds to Other Taxable Bonds,the Comparison Must