BaseballRedhawks
New member
- Jun 18, 2026
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So i get it… muni bonds are tax-free. But the CFAi book example to find the expected real after-tax return is quite confusing…
Subtract the municipal bond return componenet form the stated return, then subject the esulting figure to a 35% tax rate and add back tax-exempt muni bond income. This calculaiton produces a nominal after-tax return form which the expected 4% per year inflaiton rate is subtracted to arrive at the real, after-tax return.
I kind of get the formula.. Basically you take the total portfolio return. subject the portion’s return that is tax-free, which is muni bonds. Then you take the tax part out of that number and then add up the tax-free portion (muni-bonds), then subtract the interest rate.
Any better way to remember this?
Subtract the municipal bond return componenet form the stated return, then subject the esulting figure to a 35% tax rate and add back tax-exempt muni bond income. This calculaiton produces a nominal after-tax return form which the expected 4% per year inflaiton rate is subtracted to arrive at the real, after-tax return.
I kind of get the formula.. Basically you take the total portfolio return. subject the portion’s return that is tax-free, which is muni bonds. Then you take the tax part out of that number and then add up the tax-free portion (muni-bonds), then subtract the interest rate.
Any better way to remember this?