A 55%, 20-Year Municipal Bond Is Currently Priced to Yield 7

question 11

Multiple Choice

A 5.5%, 20-year municipal bond is currently priced to yield 7.2%. For a taxpayer in the 33% marginal tax bracket, this bond would offer an equivalent taxable yield of

• A) 8.20%.
• B) 10.75%.
• C) 11.40%.
• D) 4.82%.

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Definitions:

pH

A scale used to specify the acidity or basicity of an aqueous solution, with values typically ranging from 0 (acidic) to 14 (basic).

HCl

Hydrochloric acid, a strong corrosive acid that is a simple diatomic molecule consisting of hydrogen and chlorine, used in many industrial and scientific applications.

K

The elemental symbol for potassium, a metal that is essential for life and is used in a wide variety of industrial processes.