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Curtis Invests $250,000 in a City of Athens Bond That

Question 20

Multiple Choice

Curtis invests $250,000 in a city of Athens bond that pays 7% interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24%. What is Curtis's after-tax rate of return on the city of Athens bond?


A) 5.32%
B) 6.84%
C) 7.00%
D) 9.00%
E) None of the choices are correct.

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