Question
Three friendsNeelam, Ashok, and Madhuhave asked you to determine the equivalent taxable yield on a municipal bond. The bond's current yield is 6.33 percent with
Three
friendsNeelam,
Ashok,
and
Madhuhave
asked you to determine the equivalent taxable yield on a municipal bond. The bond's current yield is
6.33
percent with 5 years left until maturity.
Neelam
is in the
15
percent marginal tax bracket,
Ashok
is in the
25
percent bracket, and
Madhu
is in the
35
percent bracket. Calculate the equivalent taxable yield for your three friends. Assuming a similar AAA corporate bond yields
7.00
percent, which of your friends should purchase the municipal bond?
Question content area bottom
Part 1
The equivalent taxable yield for
Neelam
who has a
15
percent marginal tax bracket is
enter your response here%.
(Round to two decimal places.)
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