Which of the Following Statements Is True

Multiple Choice

Which of the following statements is true?

A) Because coupon payments on tax-exempt bonds are exempt from federal income tax, the expected after-tax return on them will be higher for individuals in higher income tax brackets.
B) An increase in tax rates will decrease the demand for tax-exempt bonds, lowering their interest rates.
C) Interest rates on tax-exempt bonds will be higher than comparable bonds without the tax exemption.
D) Because coupon payments on tax-exempt are exempt from federal income tax, the expected after-tax return on them will be lower for individuals in higher income tax brackets.