What is the taxable equivalent yield

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Many states also exempt interest on municipal bonds from state income taxes if those bonds are issued by that state or its local governments. Suppose that you buy municipal bonds issued in your state, and your federal marginal tax rate is 28 percent and your state marginal tax rate is 6 percent. If the yield on the bonds is 3.5 percent, what is the taxable equivalent yield?

Reference no: EM131204693

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