The equivalent taxable yield for municipal bond

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Reference no: EM131958453

What is the equivalent taxable yield for a municipal bond that yields 3.20%? Assume a tax rate of 40%.

You are choosing between a fully taxable investment with a before-tax yield of 5% and a municipal bond with a yield of 3.9%. At what tax rate are you indifferent between the investments?

Reference no: EM131958453

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