Principles of Investment Answers

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What should an investor consider when making an investment? Check all that apply.the rate of inflation, which could affect the value of the returnthe history of the investment, which will indicate the level of riskany taxes that will need to be paid at the state and federal levelsthe nominal interest rate, which will show the real profit to be madethe length of the investment, because long term always means high riskthe level of risk, because the higher it is, the higher the potential loss is

A
the rate of inflation, which could affect the value of the return
B
the history of the investment, which will indicate the level of risk
C
any taxes that will need to be paid at the state and federal levels
D
the nominal interest rate, which will show the real profit to be made
E
the length of the investment, because long term always means high risk
F
the level of risk, because the higher it is, the higher the potential loss is
2
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$800✔ $1,000X $1,200

A
$800
B
✔ $1,000
C
X $1,200
3

$2,200✔ $2,800X $3,000

A
$2,200
B
✔ $2,800
C
X $3,000
122589

✔ $200$400$600

Answers:
Annie must pay in taxes to the state government on her investment.:$200
She also must pay in taxes to the federal government.:$1,000
As a result of the money she will lose to taxes, the real value of Annie’s profit is .:$2,800
122590

$800✔ $1,000$1,200

A
$800
B
✔ $1,000
C
$1,200
122591

$2,200✔ $2,800$3,000

A
$2,200
B
✔ $2,800
C
$3,000
122592

Question text not available

Answers:
The state tax Patrick must pay on the initial profit is .:$346.25
The federal tax he must pay on the initial profit is .:$1,731.25
The inflation on the amount remaining after taxes is .:$145.43
As a result, the real value of Patrick’s profit in whole dollars is .:$4,702
122593

$1,750✔ $1,731.25X $2,100.75

A
$1,750
B
✔ $1,731.25
C
X $2,100.75
122594

$147$98.75✔ $145.43

A
$147
B
$98.75
C
✔ $145.43
122595

$4,825$4,678✔ $4,702

A
$4,825
B
$4,678
C
✔ $4,702
122596

This investment is best considered

A
high risk with the potential for a low return.
B
high risk with the potential for a high return.
C
low risk with the potential for a low return.
D
low risk with the potential for a high return.
122597

Which statement best explains the interest rates related to this CD?

A
The nominal interest rate is 3 percent, while the real interest rate is 2 percent.
B
The nominal interest rate is 3 percent, while the real interest rate is 1 percent.
C
The nominal interest rate is 1 percent, while the real interest rate is 2 percent.
D
The nominal interest rate is 2 percent, while the real interest rate is 4 percent.
122600

✔ $200$400$600

Answers:
Annie must pay in taxes to the state government on her investment.:$200
She also must pay in taxes to the federal government.:$1,000
As a result of the money she will lose to taxes, the real value of Annie’s profit is .:$2,800
122601

What is most likely to happen as a result of the change in interest rates?

A
Housing prices will go up and down due to changing fiscal policy.
B
The market will experience more demand and the price of houses will go up.
C
The price of houses will go down in response to the decreased demand.
D
The prices for homes in that area will be stable due to the new monetary policy.
122602

What should an investor consider when making an investment? Check all that apply.the rate of inflation, which could affect the value of the returnthe history of the investment, which will indicate the level of riskany taxes that will need to be paid at the state and federal levelsthe nominal interest rate, which will show the real profit to be madethe length of the investment, because long term always means high riskthe level of risk, because the higher it is, the higher the potential loss is

A
the rate of inflation, which could affect the value of the return
B
the history of the investment, which will indicate the level of risk
C
any taxes that will need to be paid at the state and federal levels
D
the nominal interest rate, which will show the real profit to be made
E
the length of the investment, because long term always means high risk
F
the level of risk, because the higher it is, the higher the potential loss is
122603

This investment is best considered

A
high risk with the potential for a low return.
B
high risk with the potential for a high return.
C
low risk with the potential for a low return.
D
low risk with the potential for a high return.
122604

Which statement best explains the interest rates related to this CD?

A
The nominal interest rate is 3 percent, while the real interest rate is 2 percent.
B
The nominal interest rate is 3 percent, while the real interest rate is 1 percent.
C
The nominal interest rate is 1 percent, while the real interest rate is 2 percent.
D
The nominal interest rate is 2 percent, while the real interest rate is 4 percent.

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