A recent article in this journal [1] described a model for the computation of taxadjusted true yields to maturity on discount bonds and explained the use of a computer routine implementing this model. Unfortunately, the translation of the computer program into equation form contained a number of notational errors. In addition, there was an equals sign missing from the third equation [1, page 267]. As a result, the reader, in attempting to implement the model as it was formulated in the original article, will probably fail.

This paper proposes a model that a dealer or investor may employ in determining• The potential investment value of a debt instrument, • The potential gains in net after-tax yield which result from swaps, and• The trade-off, effective, after-tax yield on a municipal vs a taxable corporate bond of the same quality or rating.