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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