Which of the Following Is the Best Example of Economic

question 78

Multiple Choice

Which of the following is the best example of economic investment?

• A) Apple builds a new plant to manufacture iPads.
• B) Your college purchases a 5-year-old building in order to have more classrooms.
• C) A retiree purchases U.S. government bonds.
• D) A company, like Bank of America, acquires another company, like Merrill Lynch.

---

Definitions:

Coupons

The interest payments made to bondholders, typically on an annual or semi-annual basis.

Yield-to-maturity

The total return anticipated on a bond if it is held until the end of its lifetime, taking into account both interest payments and capital gains or losses.

After-tax Rate

The rate of return on an investment after accounting for taxes, giving a more accurate reflection of the actual take-home returns.

Marginal Tax Rate

The percentage of tax applied to your income for each tax bracket in which you qualify, essentially the tax rate you would pay on one additional dollar of income.