One of the Problems with Most Bonds Is That Their

question 132

Multiple Choice

One of the problems with most bonds is that their coupon payment is fixed and rising inflation weakens the purchasing power of their coupon payments.Which of the following bonds is the best option during times of high inflation?

• A)FNMA Agency bonds
• B)TIPS
• C)High grade corporate bonds
• D)High yield speculative bonds

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Definitions:

Average Tax Rate

The portion of total income that is paid as taxes, calculated by dividing the total amount of taxes paid by the total income.

Tax Liability

The total amount of tax that an individual or business owes to the government, based on their income or revenue.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, representing the percentage of tax applied to your income for each tax bracket in which you qualify.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), showing the percentage of income or spending that goes to taxes.