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Question: QUESTION 11 The taxing and spending policies of the Federal Government designed to promote nati...

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QUESTION 11

1. The taxing and spending policies of the Federal Government designed to promote national ecomomic goals are known as "fiscal policy."

   True

   False

3 points   

QUESTION 12

1. Most states exempt their own municipal securities from their own state and local taxes.

   True

   False

3 points   

QUESTION 13

1. Firm commitment underwriting is performed by an investment bank that has guaranteed the issuer a sum of money that will be raised by an Initial Public Offering

   True

   False

Answer 1

11. The correct answer is 'True'. The taxing and spending policy framed by the government every year is known as Fiscal Policy. Here, the word 'Fiscal' refers to the 'year'. Hence, its the yearly policy of the government. In this the government decides what to tax and what to remove from taxation, along with sectors in which spending has to increase or decrease.

12. The correct answer is 'True'. The municipal bonds or securities are exempt from federal, state and local taxes. This is done to promote investment within these bonds in an effective way so that government can meet up its funds requirement. These securities are also known as muni and is quite famous among investors.

13. The correct answer is 'True'. Firm underwriting is an agreement between the issuer of shares and the firm underwriters. The firm underwriters here means investment bankers which are being hired by the issuer for the purpose of raising money. Under firm underwriting, the firm underwriters ensures issuer that in case of non subscription of specified amount of shares from public the same will be subscribed from firm underwriters as per the agreement.