June Tavia Is Trying to Calculate the Taxable Equivalent Yield

Multiple Choice

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond.If the bond she owns pays 4.5 percent interest and she is in the 25 percent tax bracket,what is the taxable-equivalent yield?

A) 4.50 percent
B) 5.50 percent
C) 6.00 percent
D) 7.72 percent
E) 6.93 percent