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:

Good Quality

The degree to which a product or service meets or exceeds customer expectations.

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, often due to asymmetric information.

Recklessly

Acting with a lack of concern for the risk or negative consequences of one's actions.

Airbags

Safety devices in vehicles designed to inflate rapidly in the event of a collision to prevent or reduce injury to passengers by limiting direct impact.