Juan Carlos Cashed in a Savings Bond That Had Earned

question 79

Multiple Choice

Juan Carlos cashed in a savings bond that had earned $400 in interest. His tax bracket is 12%, and his state charges 6% on investment income. How much tax will Juan Carlos pay on the interest from the bond?

• A) $48.
• B) $36.
• C) $24.
• D) $0.

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Definitions:

Initial Offering Price

The price at which a company's shares are offered to the public for the first time during an initial public offering (IPO).

Green Shoe Pricing

A term NO.

Yield Burning

The practice of financial intermediaries marking up the prices on bonds to reduce the yield, often in the context of municipal bond refinancing.

Underpricing

The practice of setting the initial offering price of a security, typically a stock, below its market value.