When Fear of Default on Bonds Issued by U

question 18

Multiple Choice

When fear of default on bonds issued by U.S.corporations decline,then

• A)net capital outflow and the exchange rate both rise.
• B)net capital outflow rises and the exchange rate falls.
• C)net capital outflow falls and the exchange rate rises.
• D)net capital outflow and the exchange rate both fall.

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Definitions:

Recognize Income

Recognize income refers to the point in time when income is considered earned and must be reported for tax purposes.

Tax-exempt

Income or transactions that are legally excluded from taxation.

Economic Benefit

The advantage or gain received from a financial transaction or situation, which may have tax implications or influence fiscal decisions.

Nontaxable Return of Capital

A payment received from an investment that is not taxed because it is considered a portion of the original investment's cost being returned to the investor.