Daniel Plans to Invest $20,000 in Either a Corporate Bond

question 120

Multiple Choice

Daniel plans to invest $20,000 in either a corporate bond paying 5% or a tax-exempt bond with a 4% interest rate.The bonds have an equivalent level of risk.Daniel has a 33% marginal tax rate and wants to maximize his after-tax earnings.Daniel should

• A)invest in the corporate bond due to its higher stated interest rate.
• B)invest in the tax-exempt bond since its yield is more than the after-tax return on the corporate bond.
• C)invest in the corporate bond because its after-tax earnings are more than the return on the tax-exempt bond.
• D)allocate his money equally between the two investments.

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Definitions:

Biological Divisions

Broad categorizations within biology that help to organize and classify life forms, such as kingdom, phylum, class, order, family, genus, and species.

Racial Discrimination

Unfair treatment of individuals based on their race or ethnicity, often manifesting in social, economic, and political exclusion or disadvantage.

Indigenous

Peoples native to a region, recognized for their distinct social, cultural, and historical traditions separate from dominant post-colonial cultures.

Mentoring

A personal development relationship where a more experienced or knowledgeable person helps to guide a less experienced or knowledgeable person.