Yields of a Bond A 4.5 percent coupon municipal bond has 10 years left to maturity and has a price quote of 97.75.The bond can be called in four years.The call premium is one year of coupon payments.What is the bond's taxable equivalent yield for an investor in the 33 percent marginal tax bracket? (Assume interest payments are paid semi-annually and a par value of $5,000.)

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The taxable equivalent yield is calculated by dividing the tax-free yield by (1 - tax rate). The bond's yield is 4.5%, and the investor's tax bracket is 33%, so the taxable equivalent yield is 4.5% / (1 - 0.33) = 6.72%. However, considering the bond's price and call feature, the yield to call is higher, leading to a taxable equivalent yield closer to 7.13%.

Yields of a Bond a 4