Business and Personal Finance Dictionary

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• EQUIVALENT TAXABLE YIELD
  
  Although tax-exempt municipal bonds generally pay interest at a lower rate than taxable corporate bonds, agency bonds, and Treasurys, they may actually provide a higher yield, especially if you are in the higher federal income tax brackets. That's because a certain percentage of your taxable yield disappears to pay the tax that's due. You can use the formula below to find the equivalent taxable yield you'd need to equal the yield you'd realize on a tax-exempt bond.
  
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