In regards to the yields on municipal bonds, the yield ratio has changed over time. The ________, the more attractive the tax-exempt feature and the ________.

Question

Quizplus · Accepted Answer

When the tax rate is higher, the tax-exempt feature of municipal bonds becomes more attractive, leading to lower yields on these bonds. Therefore, the yield ratio is lower when the tax rate is higher. Option A is incorrect because a lower tax rate would make the tax-exempt feature less attractive, leading to higher yields on municipal bonds. Option B is incorrect because it suggests that higher tax rates lead to higher yields, which is the opposite of what happens. Option D is incorrect because there is a definite relationship between tax rates and yield ratios.

In Regards to the Yields on Municipal Bonds, the Yield