Everything Else Held Constant,the Interest Rate on Municipal Bonds Rises

question 78

Multiple Choice

Everything else held constant,the interest rate on municipal bonds rises relative to the interest rate on Treasury securities when

• A)income tax rates are lowered.
• B)income tax rates are raised.
• C)municipal bonds become more widely traded.
• D)corporate bonds become riskier.

---

Definitions:

Tender Offer

A public, open offer or invitation (usually made by a company) to all shareholders to sell their shares at a particular price during a specified time.

Proxy Contest

A competition for the control or influence over a company by requiring shareholders to vote by proxy.

Shareholder Votes

The process by which shareholders exercise their right to make decisions on corporate matters, typically exercised during annual general meetings.