Offer lower returns than similiar taxable corporate bonds

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Municipal bonds usually offer lower returns than similiar taxable corporate bonds. But how does the investor know the tax benefits will make up for the lower yield. The taxable yield helps to decide. Assume anne is in a tax bracket of 28% and invests in a municipal bond with a 10% interest rate or a coporate bond with a 12% interest rate. Using the tax equivalent yield--which should she invest in, show all work please.

Reference no: EM131560702

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Offer lower returns than similiar taxable corporate bonds : Municipal bonds usually offer lower returns than similiar taxable corporate bonds.

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