yield equivalence
Yield equivalence
The interest rate at which a tax-exempt bond and a taxable security of similar quality give the investor the same rate of return.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
yield equivalence
Equal aftertax returns on different investments. As an example, for an investor in a 25% marginal tax bracket, a corporate bond with a taxable return of 8% has yield equivalence with a tax-free bond returning 6%.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.