Tax-Exempt Bond Interest Rates Increase Relative to Corporate Bond Interest

question 84

Multiple Choice

Tax-exempt bond interest rates increase relative to corporate bond interest rates when ________.

• A) income taxes are increased
• B) corporate bonds become riskier
• C) U.S. Treasury securities become more widely traded
• D) there is a major default in the tax-exempt bond market

---

Definitions:

Z Test Statistic

A type of statistical test where the test statistic follows a normal distribution under the null hypothesis.

Population Proportion

The fraction or percentage of a population that possesses a particular attribute or characteristic.

Sampling Distribution

The framework of distributed probabilities for an established statistic, gathered from random sampling.

Approximately Normal

Describing a distribution that resembles the bell-shaped curve of a normal distribution, especially when certain statistical conditions are met.