Suppose the Interest Rate on New Issues of Canada Savings

question 3

Multiple Choice

Suppose the interest rate on new issues of Canada Savings Bonds is 5% per year and the federal income tax rate on nominal interest earnings is 40%.If the inflation rate is 3%,then an investor's after-tax real rate of return on Canada savings Bonds is

• A) 5%.
• B) 4%.
• C) 3%.
• D) 2%.
• E) 0%.

---

Definitions:

Spleen

An organ located under the ribcage and above the stomach in the left upper quadrant of the abdomen. It acts in filtering and storing blood as part of the immune system.

Abdomen

The part of the body containing the digestive organs; located between the thorax and pelvis.

Stomach

The digestive organ in the gastrointestinal tract that breaks down food with acid and enzymes.

Lymphatic Ducts

Large vessels in the lymphatic system that drain lymph from the lymphatic vessels into the venous system, helping to maintain fluid balance and immune defenses.