A municipal bond has a quoted yield of 5%.If an investor has a 20% marginal tax rate,the bond's after-tax yield is

Question

Quizplus · Accepted Answer

The after-tax yield of a municipal bond for an investor is the same as its quoted yield if the interest from the bond is exempt from federal income taxes, which is typically the case for municipal bonds. Therefore, even if the investor has a 20% marginal tax rate, the after-tax yield remains 5%, as the interest income is not subject to this tax.

A Municipal Bond Has a Quoted Yield of 5