If all other characteristics are similar, ____ would have to offer ____.
A)taxable securities; a higher after-tax yield than tax-exempt securities
B)taxable securities; a higher before-tax yield than tax-exempt securities
C)tax-exempt securities; a higher after-tax yield than taxable securities
D)tax-exempt securities; a higher before-tax yield than taxable securities

Question

Quizplus · Accepted Answer

Taxable securities must offer a higher before-tax yield than tax-exempt securities to compensate for the taxes investors must pay on the earnings from taxable securities, making them attractive compared to tax-exempt securities.

If All Other Characteristics Are Similar, ____ Would Have to Offer