A 7-year municipal bond yields 4.80%.Your marginal tax rate (including state and federal taxes)is 32.00%.What interest rate on a 7-year corporate bond of equal risk would provide you with the same after-tax return? (Round your final answer to two decimal places. )

Question

Quizplus · Accepted Answer

To find the equivalent corporate bond yield, use the formula: Municipal yield / (1 - tax rate). So, 4.80% / (1 - 0.32) = 7.06%.

A 7-Year Municipal Bond Yields 4