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You have 2 bonds of equal risk that you are looking at: Tax Free...

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Question

Finance

  1. You have 2 bonds of equal risk that you are looking at:

Tax Free Bond Yield is 4.75%

Taxable Bond Yield is 6.15%

Assuming you are in the 28% tax bracket, Calculate the following.

  1. Tax Equivalent Yield or Equivalent Taxable Yield on the Tax Free Bond
  2. After Tax Yield on the Taxable Bond
  3. Which bond would you choose and why?

Answer & Explanation Solved by verified expert
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