Question

Answer the below questions.
(a) What is the equivalent taxable yield for an investor facing a 40% marginal tax rate, and who can purchase a tax-exempt municipal bond with a yield of 7.2?
(b) What are the limitations of using the equivalent taxable yield as a measure of relative value of a tax-exempt bond versus a taxable bond?


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  • CreatedAugust 22, 2015
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