Yield equivalence

Definition:

The interest rate at which a tax-exempt bond and a taxable security of similar quality give the investor the same rate of return.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Expected future return

The return that is expected to be earned on an asset in the future. Also called the expected return.

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