Which of the following investments has the biggest tax advan

Which of the following investments has the biggest tax advantage?

a. Municipal bonds
b. Corporate bonds
c. Stocks
d. Commercial paper

Companies with limited earnings and strong growth opportunities

a. Generally pay high dividends
b. Are speculative stocks
c. Generally do not pay high dividends
d. Are called blue-chip stocks

ANSWER ALLLL

Solution

Which of the following investments has the biggest tax advantage?

CORRECT ANSWER : a : MUNICIPAL BONDS

There are dual advantage in municipal bonds. Investors do not have to pay state taxes as well as federal taxes, which makes them comparably more beneficial for investors. Generally high income group individuals prefer these types of bonds to save taxes

Companies with limited earnings and strong growth opportunities

CORRECT ANSWER : c : Generally do not pay higher dividends

As company is in growth phase, company tries to reinvest earnings so that they can increase their earnings and in future shareholders will be rewarded with higher capital gain