Municipal bonds are yielding 4.4 percent if they are insured and 4.7 percent if they are uninsured.Your marginal tax rate is 28 percent.Your equivalent taxable yield on the insured bonds is ________ percent and on the uninsured bonds is ________ percent.

Question

Quizplus · Accepted Answer

Equivalent taxable yield = 0.044 / (1 − 0.28) = 6.11 percent
Equivalent taxable yield = 0.047 / (1 − 0.28) = 6.53 percent

Municipal Bonds Are Yielding 4