Jackson Has the Choice to Invest in City of Mitchell

question 71

Multiple Choice

Jackson has the choice to invest in city of Mitchell bonds or Sundial, Incorporated corporate bonds that pay 10 percent interest. Jackson is a single taxpayer who earns $55,000 annually. Assume that the city of Mitchell bonds and the Sundial, Incorporated bonds have similar risk. Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 8 percent. How would you advise Jackson to invest his money?

• A)Invest in Sundial, Incorporated bonds because their explicit tax is greater than the implicit tax on city of Mitchell bonds.
• B)Invest in city of Mitchell bonds because their implicit tax is greater than the explicit tax on Sundial, Incorporated bonds.
• C)Invest in Sundial, Incorporated bonds because their explicit tax is less than the implicit tax on city of Mitchell bonds.
• D)Invest in city of Mitchell bonds because their implicit tax is less than the explicit tax on Sundial, Incorporated bonds.
• E)None of the choices are correct.

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Definitions:

American Southeast

A geographic region in the United States comprising states predominantly located in the southeastern part of the country.

Old Confederacy

Refers to the southern states of the USA that seceded from the Union and formed the Confederate States of America during the Civil War.

Collective-Emotional Structures

The shared affective frameworks and emotional norms within a society that influence individual feelings and societal dynamics.

Racial Formation

The process by which social, economic, and political forces determine the content and importance of racial categories, and by which they are in turn shaped by racial meanings.