Curtis Invests $250,000 in a City of Athens Bond That

question 10

Multiple Choice

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest.Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc.that pays 9 percent interest with similar risk as the city of Athens bond.Assume that Curtis's marginal tax rate is 24 percent. What is Curtis's after-tax rate of return on the city of Athens bond?

• A)5.32 percent
• B)6.84 percent
• C)7.00 percent
• D)9.00 percent
• E)None of the choices are correct

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Definitions:

Propanoic Acid

An organic carboxylic acid with the chemical formula C3H6O2, known for its foul odor and use in food preservatives.

Organic Halide

Organic compounds containing one or more halogen atoms (fluorine, chlorine, bromine, or iodine) attached to carbon atoms, widely used in organic synthesis and industrial applications.

Cyanide Ion

A negatively charged ion (CN-) known for its high toxicity; it is composed of one carbon atom triple-bonded to a nitrogen atom.

Nitrile Hydrolysis

Nitrile hydrolysis is a chemical reaction where a nitrile group (C≡N) is converted into a carboxylic acid or its derivatives through the addition of water (H2O).