What's the taxable equivalent yield on a municipal bond with a yield to maturity of 3.9 percent for an investor in the 35 percent marginal tax bracket?

Name: What's the taxable equivalent yield on a municipal bond with a yield to maturity of 3.9 percent for an investor in the 35 percent marginal tax bracket?
Brand: Quizplus
Rating: 4.9 (50 reviews)

Question

Quizplus · Accepted Answer

The taxable equivalent yield is calculated as the tax-exempt yield divided by (1 - tax rate). So, for a 3.9% yield and a 35% tax bracket, it's 3.9% / (1 - 0.35) = 6.00%.

What's the Taxable Equivalent Yield on a Municipal Bond with a Yield