An Investment Is Available That Pays a Tax-Free 6

question 19

Multiple Choice

An investment is available that pays a tax-free 6%.Ignoring risk,what is the pre-tax return on taxable bonds? The corporate tax rate is 35%.

• A)3.50%
• B)6.00%
• C)7.14%
• D)9.23%
• E)None of the above.

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Definitions:

Liberally Administered

A principle or policy applied in a manner that is flexible, generous, or not strictly in accordance with strict rules or formalities.

Aggrieved Party

An individual or entity that has suffered legal wrong or harm, and who is entitled to bring a lawsuit against the party responsible for that harm.

Modified Contract

An agreement where the original terms have been altered or amended by the parties involved, following mutual consent.

Consideration

The value (such as money, a promise, or a service) that is given by both parties in a contract making the agreement legally binding.