The break-even tax rate between a taxable corporate bond yielding 7 percent and a comparable nontaxable municipal bond yielding 5

Bonds issued by the U.S. government:    A.  are considered to be free of interest rate risk. B.  generally have higher coupons than those issued by an individual state. C.  are considered to be free of default risk. D.  pay interest that is exempt from federal income taxes. E.  are called "munis". Refer to section 7.4

58.

Treasury bonds are:    A.  issued by any governmental agency in the U.S. B.  issued only on the first day of each fiscal year by the U.S. Department of Treasury. C.  bonds that offer the best tax benefits of any bonds currently available. D.  generally issued as semi-annual coupon bonds. E.  totally risk-free. Refer to section 7.4

59.	Municipal bonds:    A.  are totally risk-free. B.  generally have higher coupon rates than corporate bonds. C.  pay interest that is federally tax-free. D.  are rarely callable. E.  are free of default-risk. Refer to section 7.4

60.

The break-even tax rate between a taxable corporate bond yielding 7 percent and a comparable nontaxable municipal bond yielding 5 percent can be expressed as:    A.  0.05/(1 - t*) = 0.07. B.  0.05 - (1 - t*) = 0.07. C.  0.07 + (1 - t*) = 0.05. D.  0.05 × (1 - t*) = 0.07. E.  0.05 × (1 + t*) = 0.07. Refer to section 7.4