Many Investors May Be Drawn to Bonds with Capital Gains

question 48

Multiple Choice

Many investors may be drawn to bonds with capital gains only because:

• A)no taxation on capital gains.
• B)high coupon payments.
• C)long periods until maturity.
• D)reduced taxation on capital gains.

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Definitions:

Illusory Correlation

The perception of a relationship between two variables when no such relationship actually exists.

Supreme Court

The highest judicial court in a country or state, which has the final authority over all legal disputes.

Theory Perseverance

Proposes that once the mind draws a conclusion, it tends to stick with that conclusion unless there is overwhelming evidence to change it.

Counterfactual Thinking

Imagining alternatives to past or present events or circumstances.