Q We associate the term debt finance with
the bond market, and we associate the term equity finance with thestock market.
the stock market, and we associate the term equity finance with thebond market.
financial intermediaries, and we associate the term equity financewith financial markets.
financial markets, and we associate the term equity finance withfinancial intermediaries.

Q You hold bonds issued by the state of Ohio. The interest you earneach year on these bonds
is not subject to federal income tax and so these bonds pay ahigher interest rate than otherwise comparable bonds issued by theU.S. government.
is not subject to federal income tax and so these bonds pay a lowerinterest rate than otherwise comparable bonds issued by the U.S.government.
is subject to federal income tax and so these bonds pay a higherinterest rate than otherwise comparable bonds issued by the U.S.government.
is subject to federal income tax and so these bonds pay a lowerinterest rate than otherwise comparable bonds issued by the U.S.government.

Municipal bonds pay a relatively
low rate of interest because of their high default risk and becausethe interest they pay is subject to federal income tax.
low rate of interest because of their low default risk and becausethe interest they pay is not subject to federal income tax.
high rate of interest because of their high default risk andbecause federal taxes must be paid on the interest they pay.
high rate of interest because of their low default risk and becausethe interest they pay is not subject to federal income tax.

Q In the small closed economy of San Lucretia, the
currency is the denar. Statistics for last year show that privatesaving was 60
billion denars, taxes were 70 billion denars, government purchasesof goods and
services were 80 billion denars, there were no transfer payments bythe
government, and GDP was 400 billion denars. What were consumptionand investment
in San Lucretia?

QUESTION TITLE :- We associate the term debt finance with

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