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A tax exempt municipal bond is issued with a 4.25% coupon, 10 year maturity, and is trading at par. The effective tax rate is 25%.

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A tax exempt municipal bond is issued with a 4.25% coupon, 10 year maturity, and is trading at par. The effective tax rate is 25%. What is the taxable equivalent yield? Is it a better investment to buy the tax exempt municipal bond or a 5.75% yielding taxable bond of the same maturity

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