The yields of the municipal bonds is __________?
Correct answer: A. after tax rate of return
- A. after tax rate of return
- B. before tax rate of return
- C. corporative rate of return
- D. federal rate of return
Explanation
Municipal bond interest is generally exempt from federal income tax, so its relevant yield is treated as an after-tax rate of return. This tax advantage is why investors compare municipal yields with after-tax corporate or taxable-bond yields.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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