The Interest Rate for a Tax-Exempt Bond That Equates to the Rate

Multiple Choice

The interest rate for a tax-exempt bond that equates to the rate paid on a taxable bond is computed as:

A) Taxable rate/(1 − T^*) .
B) Tax-exempt rate × (1 − T^*) .
C) Taxable rate − (1 + T^*) .
D) Taxable rate × (1 − T^*) .
E) Tax-exempt rate/(1 + T^*) .