Which of the Following Statements About the Rate of Return

question 50

Multiple Choice

Which of the following statements about the rate of return is NOT correct?

• A) The total rate of return may be greater or less than the current yield.
• B) The total rate of return may be greater or less than the rate of capital gain.
• C) The total rate of return may never be negative.
• D) The total rate of return is greater than the coupon, holding everything else constant.

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Definitions:

Indirect Taxes

Taxes that are not directly paid by an individual but instead are levied on goods and services, such as sales tax or value-added tax.

Federal Government

The national government of a federal country, which holds the authority to govern the federation as a whole.

Proportional Tax

A tax system where the rate of taxation is fixed and does not change based on the income level, meaning everyone pays the same percentage of their income in taxes.

Excise Tax

A tax imposed on specific goods, services, or transactions, often included in the price of products like gasoline, tobacco, and alcohol.