A bond issued by the state of Alabama is priced to yield 6.25%. If you are in the 28% tax bracket, this bond would provide you with an equivalent taxable yield of ________.
A) 4.5%
B) 7.25%
C) 8.68%
D) none of these options

Name: A bond issued by the state of Alabama is priced to yield 6.25%. If you are in the 28% tax bracket, this bond would provide you with an equivalent taxable yield of ________. A) 4.5% B) 7.25% C) 8.68% D) none of these options
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Question

Quizplus · Accepted Answer

8.68% = 0.0625/(1 - 0.28)

A Bond Issued by the State of Alabama Is Priced