Suppose the tax rate is 25% and the taxable bond yield is 8%. What is the equivalent tax-exempt bond yield?
A) 2%
B) 2.3%
C) 6%
D) 6.9%

Name: Suppose the tax rate is 25% and the taxable bond yield is 8%. What is the equivalent tax-exempt bond yield? A) 2% B) 2.3% C) 6% D) 6.9%
Brand: Quizplus
Rating: 4.8 (40 reviews)

Question

Quizplus · Accepted Answer

The equivalent tax-exempt bond yield can be calculated using the formula: Tax-exempt yield = Taxable yield * (1 - Tax rate). Here, it is 8% * (1 - 0.25) = 6%.

Suppose the Tax Rate Is 25% and the Taxable Bond