Suppose the City of Des Moines Has a High Credit

question 15

Multiple Choice

Suppose the city of Des Moines has a high credit rating,and so when Des Moines borrows funds by selling bonds,

• A)the city's high credit rating and the tax status of municipal bonds both contribute to a lower interest rate than would otherwise apply.
• B)the city's high credit rating and the tax status of municipal bonds both contribute to a higher interest rate than would otherwise apply.
• C)the city's high credit rating contributes to a lower interest rate than would otherwise apply,while the tax status of municipal bonds contributes to a higher interest rate than would otherwise apply.
• D)the city's high credit rating contributes to a higher interest rate than would otherwise apply,while the tax status of municipal bonds contributes to a lower interest rate than would otherwise apply.

---

Definitions:

Taxable Income

The portion of an individual's or corporation's income used as a basis for calculating the amount of income tax owed to the government.

Tax Rates

The ratio of private or corporate earnings that is annexed by governmental agencies as tax.

Net Working Capital

The variance between a firm's immediate assets and immediate obligations, showcasing the near-term fiscal well-being and procedural effectiveness of the business.

Fixed Assets

Fixed Assets, also known as non-current assets, are long-term tangible property used in the operation of a business and not expected to be converted to cash within a year.