Curtis Invests $250,000 in a City of Athens Bond That

question 98

Multiple Choice

Curtis invests $250,000 in a city of Athens bond that pays 7% interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%. If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this investment?

• A) 5.04%
• B) 7.00%
• C) 6.48%
• D) 2.52%
• E) None of these

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Definitions:

Dependent Variable

The variable that is being measured in an experiment or study to see if it is affected by changes in another variable.

Perfect-Tasting Pancake

An ideal or most desirable pancake, characterized by optimal flavor according to an individual's preferences.

Psychological Research

The scientific study of mental functions and behaviors aimed at understanding individuals and groups.

Debriefing

Providing a detailed explanation to participants after an experiment or study, clarifying the purpose and revealing any deceit used during the study.