Under Existing Federal Statutes, Arbitrage, as It Applies to State

question 29

Multiple Choice

Under existing federal statutes, arbitrage, as it applies to state and local governments is

• A)Illegal.
• B)Illegal unless the government can demonstrate a "just cause" for engaging in it.
• C)Legal in some circumstances, but the government may be required to remit arbitrage earnings to the federal government.
• D)Illegal unless there is no more than a 2 percent difference between interest earned and interest paid.

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Definitions:

Expected Dividend Yield

A forecasted annual percentage of return that comes from dividends paid by the stock, calculated by dividing the anticipated annual dividend by the current stock price.

Expected Growth Rate

The rate at which a company, investment, or economy is anticipated to grow over a specified period.

Constant Rate

This term refers to a fixed rate over a period of time, often used in the context of financial instruments with fixed interest rates.

Projected Increase

An estimate or forecast of the amount by which something is expected to grow within a certain time frame.