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denpristay [2]
3 years ago
13

A municipal bond has a coupon rate of 5.11 percent and a YTM of 5.41 percent. If an investor has a marginal tax rate of 35 perce

nt, what is the equivalent pretax yield on a taxable bond
Business
1 answer:
Anettt [7]3 years ago
3 0

Answer:pretax yield = 5.11 x 1.35 = 6.8985 = 6.90%

Explanation:

a pretax yield is a yield that a taxable bond must have in order for the yield to equal to a yield of a bond that is tax free

pretax yield = 5.11 x 1.35 = 6.8985 = 6.90%

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