If Their Only Concern Were the Cost of Issuing Municipal

question 118

Multiple Choice

If their only concern were the cost of issuing municipal debt, how would you expect the mayors of most U.S. cities to respond to a revenue-neutral change in the federal income tax that sharply lowered the top marginal tax rate?

• A) Favorably, since this will significantly increase the demand for municipal bonds.
• B) Unfavorably, the demand for municipal bonds will fall and their yields will increase.
• C) Favorably, the price of municipal bonds should increase and their yields fall.
• D) No reaction, this should have no impact on municipal bonds at all.

Distinguish between different states of contracts: express, implied, executed, and executory.

Identify circumstances under which contracts may be considered void, voidable, or unenforceable.

Recognize the legal principles that apply to ambiguous contract terms.

Understand the legal concept of a quasi contract and its application.

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Definitions:

Motivated Forgetting

A theoretical concept suggesting that people may forget unwanted information, either consciously or unconsciously, as a defense mechanism.

Time Decay

The reduction in value of an option or other derivative as the expiration date approaches.

Retroactive Interference

A phenomenon where newly learned information interferes with the recall of previously learned information.

Proactive Interference

The tendency for previously learned material to hinder subsequent learning.