taxable equivalent yield

taxable equivalent yield
taxable equivalent yield ( TEY)
The yield that a tax-free investment would provide to an investor if the tax-free yield was "grossed up" by the amount of taxes not paid. This is the most common way of comparing yields on taxable and tax-free investments. Instead of reducing a taxable yield by the amount of applicable taxes to compare it with a tax-free yield, the tax-free yield is increased by a hypothetical amount of income tax. American Banker Glossary
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The return from a higher-paying but taxable investment that would equal the return from a tax-free investment. This depends on the investor's tax bracket. Bloomberg Financial Dictionary

Financial and business terms. 2012.

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  • Fully Taxable Equivalent Yield — The yield on a municipal bond, when the effect of reduced taxes are taken into account. The fully taxable equivalent yield shows what yield a fully taxable bond would have to give, in order to be equivalent to a tax free municipal bond. The yield …   Investment dictionary

  • Tax-Equivalent Yield — The pretax yield that a taxable bond needs to possess for its yield to be equal to that of a tax free municipal bond. This calculation can be used to fairly compare the yield of a tax free bond to that of a taxable bond in order to see which bond …   Investment dictionary

  • tax-equivalent yield — The pre tax yield required from a taxable bond in order to equal the tax free yield of a municipal bond. Bloomberg Financial Dictionary …   Financial and business terms

  • Corporate taxable equivalent — Rate of return required on a par bond to produce the same after tax yield to maturity that the premium or discount bond quoted would. The New York Times Financial Glossary …   Financial and business terms

  • corporate taxable equivalent — rate of return required on a par bond to produce the same after tax yield to maturity that the quoted premium or discount bond would generate. Bloomberg Financial Dictionary …   Financial and business terms

  • Yield Equivalence — The interest rate on a taxable security that would render a return equivalent to that of a tax exempt security, and vice versa, calculated as follows: In order to calculate yield equivalence, divide the tax exempt yield by 1 minus the investor s… …   Investment dictionary

  • Equivalent taxable yield — The yield that must be offered on a taxable bond issue to give the same after tax yield as a tax exempt issue. The New York Times Financial Glossary …   Financial and business terms

  • equivalent taxable yield — The yield that must be offered on a taxable bond issue to give the same after tax yield as a tax exempt issue. Bloomberg Financial Dictionary …   Financial and business terms

  • Yield — The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment s cost, its current market value or its face value. This seemingly… …   Investment dictionary

  • TEY — taxable equivalent yield (TEY) The yield that a tax free investment would provide to an investor if the tax free yield was grossed up by the amount of taxes not paid. This is the most common way of comparing yields on taxable and tax free… …   Financial and business terms

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