The pretax yield on a municipal bond is 43 and the federal t

The pretax yield on a municipal bond is 4.3%, and the federal tax rate is 34%. Assuming there are no state taxes, what is the aftertax yield on this municipal bond? a. 1.9% b. 3.0% c. 3.5% d. 4.3% e. 4.9%

Solution

Answer to the question is D

after tax Yield on the municipal bond is - 4.3%

Municipal bonds are tax exmept so pre tax yield and after tax yield same on municipal bonds