Which of the Following Statements Is True

question 118

Multiple Choice

Which of the following statements is true?

• A) Interest on bonds is not tax deductible.
• B) Dividends to stockholders are tax deductible.
• C) Interest on bonds is tax deductible.
• D) Bonds do not have to be repaid.
• E) Bonds always increase return on equity.

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Definitions:

Money Supply

The Money Supply is the total amount of monetary assets available in an economy at any specific time, including cash, coins, and balances held in checking and savings accounts.

Interest Rates

The expense incurred when taking out a loan, usually shown as a percent of the total amount loaned.

Federal Funds Market

A U.S. financial market allowing banks to borrow and lend excess reserves to each other, usually overnight, at an interest rate called the federal funds rate.

Discount Window

The discount window is a central banking facility that allows financial institutions to borrow reserves, usually short-term, at a predetermined interest rate, to maintain liquidity.