________ Refer to Treasury Issues in Which the Principle Amount

question 19

Multiple Choice

________ refer to treasury issues in which the principle amount is tied to the Consumer Price Index to protect the buyer against the effects of inflation.

• A) Treasury notes
• B) Treasury bills
• C) Treasury bonds
• D) TIPS
• E) Municipal bonds

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government on the income or profit earned.

Optimal Capital Structure

The most favorable mix of debt and equity financing that minimizes a company's cost of capital and maximizes its stock price.

Tax Saving

Strategies or investments that reduce the amount of tax owed by taking advantage of allowable deductions, credits, or exemptions.

Optimal Capital Structure

The best combination of debt and equity financing that maximizes a company's value while minimizing its cost of capital.