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June Tavia is trying to calculate the taxable equivalent yield for a municipal bond. If the bond she owns pays 4.5 percent interest and she is in the 25 percent tax bracket, what is the taxable-equivalent yield?

Respuesta :

nicorojascalvo

Answer:

The taxable equivalent yield is 6%.

Step-by-step explanation:

The formula for the taxable equivalent yield is:

[tex]TEY = \frac{tax free bond }{(1-Tax rate)}\\ TEY = \frac{0.045 }{(1-0.25)}\\TEY = 0.06\\TEY = 6[/tex]%

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