Question

Assume you are in the 28 percent tax bracket and purchase a 3.50 percent municipal bond. calculate the taxable equivalent yield for this investment. (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.) taxable equivalent yield %

Answer 1

The taxable equivalent yield % is .98. You get this answer by converting 3.50 into decimal % form, which is .0350. You then take that number times 28 and come with .98. That gives you the answer of having a 98% taxable equivalent yield %.