Given a Nominal Interest Rate of 6 Percent,in Which of the Following

question 55

Multiple Choice

Given a nominal interest rate of 6 percent,in which of the following cases would you earn the highest after-tax real rate of interest?

• A)Inflation is 3 percent;the tax rate is 25 percent.
• B)Inflation is 1 percent;the tax rate is 50 percent.
• C)Inflation is 1 percent;the tax rate is 55 percent.
• D)Inflation is 4 percent;the tax rate is 10 percent.

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Definitions:

Voting Shares

Shares of a company that grant the shareholder the right to vote on company matters, typically at shareholders' meetings.

Reporting Issuer

A company or entity that is obligated to submit regular financial and operational reports to a regulatory agency.

Distribution of Securities

The process of making securities available to investors, typically through sale, in accordance with regulatory requirements.

Underwriter

A professional or company that assesses and assumes risk on behalf of clients, often seen in insurance, securities, and loan industries.