Morris Is Considering Investing in Some Bonds

question 140

Multiple Choice

Morris is considering investing in some bonds.Morris is in the 33% tax bracket.His broker tells him about City of Fargo,North Dakota,bonds with a yield of 6%.

• A)A U.S.Treasury bond paying 6% interest will have a greater after-tax yield than the City of Fargo bonds.
• B)A U.S.Treasury bond paying 6% interest will have the same after-tax yield as the City of Fargo bonds.
• C)The after-tax yield on City of Fargo bonds is 4% [(1.0 - .33)× 6%].
• D)A taxable bond will have to pay 9% (6% ÷ .67)interest to provide an after-tax yield equal to the yield on the City of Fargo bonds.

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Definitions:

Homogeneous Culture

A society or group where members share similar norms, values, customs, and traditions, making it relatively uniform in terms of culture.

Worldwide Culture

The global diffusion and mixing of cultures through processes like globalization, resulting in shared behaviors, values, and norms across societies.

Ethnic Resurgence

A process in which ethnic or cultural groups seek to promote their identity, traditions, and rights in response to historical suppression or neglect.

Globalization

The process by which businesses, technologies, and cultures begin operating on a global scale, leading to increased connectivity and exchange between people worldwide.