A 90 Percent Coupon Bond Issued by the State of Iowa

question 95

Multiple Choice

A 9.0 percent coupon bond issued by the State of Iowa sells for $1,000. What coupon rate on a corporate bond selling at $1,000 par value would produce the same after-tax return to the investor as the municipal bond if the investor is in the 30 percent marginal tax bracket?

• A) 6.30 percent
• B) 6.92 percent
• C) 11.70 percent
• D) 12.86 percent
• E) 15.25 percent

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Definitions:

Repeated Studying

A learning technique involving multiple sessions of reviewing material over a span of time.

Repeated Testing

The process of administering a test multiple times to the same subjects to improve reliability, measure changes, or reinforce learning.

Overlearned Information

Knowledge or skills that have been practiced beyond the point of initial mastery, making them automatic.

Levels-Of-Processing

A theory of memory suggesting that memory recall is influenced by the depth of mental processing, which ranges from shallow to deep levels.