Everything Else Held Constant,an Increase in Marginal Tax Rates Would

question 20

Multiple Choice

Everything else held constant,an increase in marginal tax rates would likely have the effect of ________ the demand for municipal bonds,and ________ the demand for U.S. government bonds.

• A)increasing;increasing
• B)increasing;decreasing
• C)decreasing;increasing
• D)decreasing;decreasing

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Definitions:

Conversion Price

Stating the conversion ratio along with the bond’s par value.

Fixed Number

A specific, unchanging quantity or value, often used in contexts requiring precise, constant measurements or counts.

Secured Bonds

Bonds that are backed by collateral, such as real estate or other assets, to reduce the risk of default to investors.

Bond Principal

The face value of a bond, or the amount of money the bond issuer will pay back to the bondholder at maturity.