Suppose One Year Ago the Price Index Was 120 and Maria

question 92

Multiple Choice

Suppose one year ago the price index was 120 and Maria purchased $20,000 worth of bonds.One year later the price index is 126.Maria redeems her bonds for $22,700 and is in a 40 percent tax bracket.What is Maria's real after-tax rate of interest to the nearest tenth of a percent?

• A)5.1 percent
• B)3.1 percent
• C)2.1 percent
• D)2.4 percent

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