gajdmaciej2257 gajdmaciej2257

28-10-2022
Business

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what's the taxable equivalent yield on a municipal bond with a yield to maturity of 4.2 percent for an investor in the 33 percent marginal tax bracket? (round your answer to 2 decimal places.)

Answer :

pragyavermav1 pragyavermav1

31-10-2022

The taxable equivalent yield on a municipal bond with a yield to maturity is 6.27%

Particulars Amount

Equivalent Taxable Yield

= 4.2%/(1-.33) 6.27%

Municipal bonds (or “munis” for short) are debt securities issued via states, towns, counties, and different governmental entities to fund everyday responsibilities and finance capital tasks consisting of constructing schools, highways, or sewer structures.

The best actual drawback of municipal bonds is that they carry relatively low hobby rates compared to different varieties of securities. That is particularly true when the economic system is powerful and interest charges for Treasury payments and CDs upward push.

Municipal bonds are federally tax-free and, in some instances, are unfastened from the kingdom and local taxes too. That means, relying on wherein you live, you could by no means owe profits taxes on the bills you get hold of from the bond's company (however they will be issued to the opportunity minimal tax or AMT).

Learn more about municipal bonds here https://brainly.com/question/1346612

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