AnswersHSA 26-27 EconomicsTaxes

Principles of Investment Answers

27 verified answers1 views
1
Free Preview

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
Free Preview

$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
4

$4,825$4,678✔ $4,702

A
$4,825
B
$4,678
C
✔ $4,702
5

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.
6

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.
7

How much interest will Michael earn on this CD in the first year, based on the nominal interest rate?

A
$400
B
$600
C
$800
D
$1,000
8

How much interest will Michael earn on this CD in the first year, based on the real interest rate?

A
$200
B
$600
C
$1,000
D
$1,400
9

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
10

✔ $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
11

$350✔ $346.25$450

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
12

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.
13

$1,750✔ $1,731.25X $2,100.75

A
$1,750
B
✔ $1,731.25
C
X $2,100.75
14

$147$98.75✔ $145.43

A
$147
B
$98.75
C
✔ $145.43
15

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
17

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.
18

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.
19

How much interest will Michael earn on this CD in the first year, based on the nominal interest rate?

A
$400
B
$600
C
$800
D
$1,000
20

How much interest will Michael earn on this CD in the first year, based on the real interest rate?

A
$200
B
$600
C
$1,000
D
$1,400
23

Question text not available

Answer not available

Did you find these answers helpful?

More from this Course

Assignment
23 verified answers

Investing

Assignment
25 verified answers

Taxes

Assignment
19 verified answers

Fiscal Policy: Taxes