Question: Equivalent Taxable Yield rm = r(1-t) r = rm/(1-t) Example: Suppose your tax rate is 25% on a taxable corporate bond. A municipal bond

Equivalent Taxable Yield rm = r(1-t) r = rm/(1-t) Example: Suppose your tax rate is 25% on a taxable corporate bond. A municipal bond is available paying 4% interest. What interest rate would you have to receive on the corporate bond for it to be equivalent to the municipal bond?

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