Which of the Following Statements Is True

question 14

Multiple Choice

Which of the following statements is true?

• A) Because coupon payments on tax-exempt bonds are exempt from federal income tax, the expected after-tax return on them will be higher for individuals in higher income tax brackets.
• B) An decrease in tax rates will increase the demand for U.S Treasury bonds, lowering their interest rates.
• C) Interest rates on tax-exempt bonds will be higher than comparable bonds without the tax exemption.
• D) An decrease in tax rates will increase the supply of U.S Treasury bonds, lowering their interest rates.

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