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16 June, 14:37

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 percent, what is the equivalent pretax yield on a taxable bond

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  1. 16 June, 17:12
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    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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