Purchase Solution

Equating Taxable and Tax-Exempt Security Yields

Not what you're looking for?

Ask Custom Question

You are considering the purchase of a tax-exempt security that is paying a yield of 10.08 percent. You are in the 28 percent tax bracket. To match this after-tax yield, you would consider taxable securities that pay ?

Purchase this Solution
Solution Summary

This solution illustrates how to equate the after-tax yield of a taxable security with a like tax-exempt security.

Solution Preview

Investors must pay income tax on their taxable interest. Thus, to equalize their ...

Purchase this Solution
Free BrainMass Quizzes
SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Motivation

This tests some key elements of major motivation theories.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

View More Free Quizzes
Related BrainMass Solutions

  • Municipal Bonds

    The expert compares yields on municipal bonds and taxable securities.

  • Corporate After Tax Yield, Cash Flow

    Shrieves's corporate tax rate is 35 percent, and 70 percent of the dividends received are tax exempt.

  • This post addresses tax yields and related issues.

    481604 This post addresses tax yields and related issues. 1. Do investors in high tax brackets or those in low tax brackets benefit more from tax-exempt securities? 2.

  • Social security taxable amount

    107668 Taxable portion of the social security benefits In addition to social security benefits of 8000, Mr and Mrs Wells have adjusted gross income of 32,000 and tax exempt interest of 1000 and will file a joint return.

  • Tax-exempt securities

    Tax exempt securities offer lower rates of return than taxable securities.

  • Tax Exempt Securities

    It imposed this tax on non tax-paying corporations and individuals who had previously substantially sheltered their taxable income through investment in tax-exempt bonds.

  • Reggie White, Jack the Treasurer, Cash Manager Ken

    If the net yield of the taxable securities is greater than the tax exempt yield of the municipal security, then Jack should invest in the taxable securities Question 2C The equivalent after tax yield of the taxable security is 5% for Jack to be indifferent

  • after-tax yields

    implication of total expected yield Not taxable, gains will only be taxed when realized Tax exempt Taxable at a rate of 15%.

  • Gross income, benefits, insurance policy payments

    Birch combined): $15,000 Tax-exempt interest: $4,000 Taxable pension: $15,000 They did not have any adjustments to income. What amount of Mr. and Mrs. Birch's Social Security benefits is taxable?

View More Related Solutions