If the nominal rate of interest on a bond was 5 percent, the inflation
If the nominal rate of interest on a bond was 5 percent, the inflation rate was 3 percent and an individual was in a 25-percent tax bracket, the after-tax real return on the bond would be equal to
a. 2 percent.
b. 2.5 percent
c. .5 percent..
d. -.5 percent.
e. none of the above.
ANSWER
C
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