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  3. the tax exempt bonds of a certain county have a yi

The tax exempt bonds of a certain county have a yield of 3.199%. The fully...

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Finance

The tax exempt bonds of a certain county have a yield of 3.199%. The fully taxable equivalent yield is 4.443%.

The answer says that you would prefer the tax exempt bonds to bonds with taxable interest that provide yields of below 4.443% even if their yield is above 3.199%.

Can anyone explain the answer to me? I dont understand why you would prefer the tax exempt bond.

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