If the Nominal Rate of Interest on a Bond Was

question 25

Multiple Choice

If the nominal rate of interest on a bond was 7 percent,the inflation rate was 6 percent and an individual was in a 50-percent tax bracket,the after-tax real return on the bond would be equal to

• A)0 percent.
• B).5 percent.
• C)6 percent.
• D)7 percent.
• E)none of the above.

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Definitions:

Cash Cycle

The duration between the outlay of cash to produce goods or services and the collection of cash from sales.

Inventory Period

The average time that goods remain in inventory before being sold, a measure of inventory management efficiency.

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Field Warehouse Loan

A form of short-term financing where a lender provides a loan with inventory as collateral, which is stored on the borrower's premises but controlled by an independent third party.