Which of the Following Tax Effects Could Not Occur with the Purchase

question 40

Multiple Choice

Which of the following tax effects could not occur with the purchase and sale of a corporate bond?

• A) Capital gain
• B) Capital loss
• C) Interest is taxed at ordinary rates.
• D) Interest is not taxable.

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Definitions:

Marginal Cost

The expense associated with creating an extra unit of a product or service.

Marginal Benefit

The further satisfaction or value an individual gains from consuming an extra unit of a certain product or service.

Optimal Quantity

The amount of a good or service that achieves the best balance between cost and benefit.

Sunk Cost

Expenses that have already been incurred and cannot be recovered, which should not influence current or future business decisions.