Glossary term
Taxable-equivalent yield
Taxable-equivalent yield estimates the taxable yield needed to match a tax-exempt yield after tax.
Plain meaning
What taxable-equivalent yield means
Taxable-equivalent yield is a comparison rate. It translates a tax-exempt yield into an estimated taxable yield using the entered tax-rate assumption.
Formula role
How OpenBook uses it
OpenBook's taxable-yield calculator divides the tax-exempt yield by one minus the entered tax rate. The result is a simplified pre-tax taxable yield comparison.
Common boundary
Why the comparison is simplified
The calculation assumes the entered tax rate applies to the taxable yield being compared. It does not model credit risk, liquidity, product fees, account type, provincial differences, or tax preferences beyond the entered rate.