The after tax yield is 9% where an investor's tax rate is 25 percent and the before-tax yield on a security is 12 percent.
The return that a taxable bond would need to provide in order to match the return on a comparable tax-exempt bond, such as a municipal bond, is known as the tax-equivalent yield.
Investors can use the formula to compare the returns of a tax-free investment with a taxable option.
In general the tax consequences are known as challenging, important, and frequently ignored part of any financial strategy.
After tax yield on security = Pre tax yield × (1 - Tax rate)
= 12% × ( 1 - 25/100)
= 9%
Hence, the after tax yield on security is 9%.
To know more about the similar questions on 'after tax'
visit- https://brainly.com/question/28210869
#SPJ4
