Which of the Following Statements Are True

question 88

Multiple Choice

Which of the following statements are true?

• A) Because coupon payments on municipal bonds are exempt from federal income tax, the expected after-tax return on them will be higher for individuals in higher income tax brackets.
• B) An increase in tax rates will increase the demand for Treasury bonds, lowering their interest rates.
• C) Interest rates on municipal bonds will be higher than on comparable bonds without the tax exemption.
• D) Only A and B are true statements.

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Definitions:

Scarce

Something that is in short supply or limited availability in relation to the demand.

Framing

The way information is presented or an issue is positioned, which can influence perceptions, attitudes, and decisions.

Persuasion

The act of convincing others to adopt a certain belief or follow a particular course of action through argument, appeal, or rationale.

Appropriateness

The quality of being suitable, proper, or fitting for a particular context, purpose, or situation.