A Seven-Year Municipal Bond Yields 4

question 40

Multiple Choice

A seven-year municipal bond yields 4.8 percent. Your marginal tax rate (including state and federal taxes) is 28 percent. What interest rate on a seven-year corporate bond of equal risk would provide you with the same after-tax return?

• A) 3.46%
• B) 4.80%
• C) 6.14%
• D) 6.67%
• E) 17.14%

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Definitions:

Pesticide Treadmill

A situation where farmers must continuously use more and different chemicals to control pests that have developed resistance to pesticides.

Net Primary Productivity

The rate at which all the plants in an ecosystem produce net useful chemical energy; essentially, it is the amount of energy that is available to the primary consumers in an ecosystem.

Photosynthesis

The process by which green plants, algae, and some bacteria convert light energy, usually from the sun, into chemical energy in the form of glucose, using water and carbon dioxide and releasing oxygen as a byproduct.

Biomass

A quantitative estimate of the total mass, or amount, of living material in a particular ecosystem.