What effect would reducing income tax rates have on the interest rates of municipal bonds? OA....

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What effect would reducing income tax rates have on the interest rates of municipal bonds? OA. Interest rates would rise because the reduction in income tax rates would make the tax-exempt privilege for municipal bonds less valuable and reduce the demand for municipal bonds. B. Interest rates would fall because Treasury securities are now less valuable and more people will want to hold municipal bonds. OC. Interest rates would rise because Treasury securities are now less valuable and more people will want to hold municipal bonds. D. Interest rates would fall because the reduction in income tax rates would make the tax-exempt privilege for municipal bonds less valuable and reduce the demand for municipal bonds. Would interest rates of Treasury securities be affected by the tax rate change? OA. Yes, because the increase in interest rates would increase the desire to hold more municipal bonds and less Treasury securities. B. No, there would be no impact on the market for Treasury securities. OC. Yes, because municipal bonds are less risky than Treasury securities, the demand for Treasury securities will decrease. OD. Yes, because the reduction in the tax-exempt privilege in municipal bonds would raise the relative value of Treasury securities, making Treasury securities more desirable. What effect would reducing income tax rates have on the interest rates of municipal bonds? OA. Interest rates would rise because the reduction in income tax rates would make the tax-exempt privilege for municipal bonds less valuable and reduce the demand for municipal bonds. B. Interest rates would fall because Treasury securities are now less valuable and more people will want to hold municipal bonds. OC. Interest rates would rise because Treasury securities are now less valuable and more people will want to hold municipal bonds. D. Interest rates would fall because the reduction in income tax rates would make the tax-exempt privilege for municipal bonds less valuable and reduce the demand for municipal bonds. Would interest rates of Treasury securities be affected by the tax rate change? OA. Yes, because the increase in interest rates would increase the desire to hold more municipal bonds and less Treasury securities. B. No, there would be no impact on the market for Treasury securities. OC. Yes, because municipal bonds are less risky than Treasury securities, the demand for Treasury securities will decrease. OD. Yes, because the reduction in the tax-exempt privilege in municipal bonds would raise the relative value of Treasury securities, making Treasury securities more desirable.

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Answer The right answer is a Interest rates would go up because a drop in incom... View the full answer