Which of the following both make the interest rate on a bond higher than otherwise?
a. the interest it pays is taxed and it was issued by a financially strong corporation
b. the interest it pays is taxed and it was issued by a financially weak corporation
c. the interest it pays is tax exempt and it was issued by a financially strong corporation
d. the interest it pays is tax exempt and it was issued by a financially weak corporation
b
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Price is taken to be a "given" by an individual firm selling in a competitive market because
A. there are no good substitutes for the firm's product. B. each producer supplies a negligible fraction of the total market. C. the firm's demand curve is downward-sloping. D. product differentiation is reinforced by extensive advertising.
If a firm's marginal product of labor is less than its average product of labor, then an increase in the quantity of labor it employs definitely will
A) decrease its total product. B) decrease its average product of labor. C) increase its marginal product of labor. D) not change its average product of labor.
If net exports are positive,
A) capital inflows must be greater than capital outflows. B) net foreign investment is negative. C) net foreign investment is also positive. D) Both A and B are correct.
Municipal bonds have default risk, yet their interest rates are lower than the rates on default-free Treasury bonds. This suggests that
A) the benefit from the tax-exempt status of municipal bonds is less than their default risk. B) the benefit from the tax-exempt status of municipal bonds equals their default risk. C) the benefit from the tax-exempt status of municipal bonds exceeds their default risk. D) Treasury bonds are not default-free.