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Three friends, Jodie, Natalie, and Neil have asked you to determine the equivalent taxable yield on a municipal bond. The bonds current yield is 3.75%
Three friends, Jodie, Natalie, and Neil have asked you to determine the equivalent taxable yield on a municipal bond. The bonds current yield is 3.75% with 5 years left until maturity. Jodie is in the 15% marginal tax bracket, Natalie is in the 25% bracket and Neil is in the 35% bracket. Calculate the equivalent taxable yield for your 3 friends. Assuming a similar AAA rated corporate bond yields 4%, which of your 3 friends should purchase the municipal bond
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