How Can Double Taxation Be Avoided or Reduced by Owning

question 65

Essay

How can double taxation be avoided or reduced by owning assets outside a C corporation?

Understand the reasons behind bond ratings and their impact on investor perceptions and bond pricing.

Analyze the term structure of interest rates and its components.

Appreciate the effect of inflation on bond returns and the Fisher effect.

Interpret bond indentures, including protective covenants and their implications for both issuers and holders.

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Definitions:

British Security

A financial instrument issued in the UK that represents either equity in a company, debt obligations, or other rights to ownership or profit.

Forward Rate

An agreed-upon price for a financial transaction that will occur at a future date.

International Fisher Effect

A theory stating that the difference in nominal interest rates between two countries is equal to the expected change in their exchange rates.

Inflation Rate

The pace at which prices for general goods and services escalate, causing a decline in the ability to purchase.