If Congress were to raise the top tax rate to say, 45%, this would

	1)Increase the attractiveness of municipal bonds
	2)Decrease the attractiveness of municipal bonds
	3)Increase the attractiveness of Treasury bonds
	4)Increase the attractiveness of corporate bonds
	5)Make credit derivatives very attractive

Solutions

Expert Solution

If Congress were to raise the top tax rate to say, 45%, this would- Increase the attractiveness of municipal bonds.

Reason: People tend to save taxes by investing in tax exempt municipal bonds. Therefore, increased taxes leads to increased demand for municipal bonds.

jeff jeffy answered 2 years ago

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