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A 4.25 percent coupon municipal bond has 10 years left to maturity and has a price quote of 108.75. The bond can be called in
A 4.25 percent coupon municipal bond has 10 years left to maturity and has a price quote of 108.75. The bond can be called in five years. The call premium is one year of coupon payments. What is the bond's taxable equivalent yield for an investor in the 28 percent marginal tax bracket? (Assume interest payments are paid semiannually and a par value of $1,000.)
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