Which of the Following Best Describes the Concept of a Marginal

question 55

Multiple Choice

Which of the following best describes the concept of a marginal tax rate?

• A) the amount of income divided by the amount of taxes
• B) the tax rate divided by total income
• C) the change in taxes divided by the amount of taxes
• D) the change in taxes divided by the change in income
• E) the amount of before-tax income divided by the amount of after-tax income

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Definitions:

Straight-Line Method

A method of allocating an asset's cost evenly throughout its useful life.

Redemption

The act of repaying or buying back something, such as redeeming a bond at maturity or a company repurchasing its own shares.

Semiannual Interest

Interest that is calculated and paid twice a year on a loan or investment.

Premium Amortization

Premium amortization is the gradual reduction of the premium paid above the par value of a bond, allocated over the bond's life.