Other Things the Same, Corporate Bonds Generally Feature Higher Interest

question 191

True/False

Other things the same, corporate bonds generally feature higher interest rates than U.S. government bonds.

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Definitions:

Marginal Tax Rate

The marginal tax rate is the rate of tax applied to the next dollar of taxable income, indicating the percentage of tax an individual or corporation pays on an additional dollar of income.

Yield-to-Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all interest payments and repaid principal.

After-Tax Cost of Debt

After-Tax Cost of Debt represents the net cost of debt to a company after accounting for the tax deductions on interest expenses.

Yield-to-Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all interest payments made over the life of the bond and the difference between the purchase price and the maturity value.