Question 1

Today most employees receive retirement benefits in the form of ________.

Accepted Answer

A)   SEPs
B)   defined benefit plans
C)   defined annuity plans
D)   defined contribution plansE) A) and B)
F) None of the above

Question 2

You earned 8% on your corporate bond portfolio this year and you are in a 15% federal tax bracket.If over your holding period inflation was 3% your real after-tax rate of return was _____.

Accepted Answer

A)   6.80%
B)   3.69%
C)   4.91%
D)   4.25%E) All of the above
F) A) and D)

Question 3

Tax shelters __________________.

Accepted Answer

A)   postpone payment of tax liabilities
B)   decrease investment risk
C)   increase the pre-tax rate of return earned
D)   benefit the government more than the investorE) B) and D)
F) None of the above

Question 4

An investor in the 34% tax bracket would be indifferent between a corporate bond with a before tax yield of 8% and a municipal bond with a yield of _________.

Accepted Answer

A)   3.91%
B)   6.15%
C)   5.28%
D)   10.72%E) B) and C)
F) B) and D)

Question 5

A person in poor health trying to buy supplemental health insurance is an example of ________.

Accepted Answer

A)   moral hazard
B)   adverse selection
C)   a Texas hedge
D)   actuarial errorE) None of the above
F) B) and C)

Question 6

Under current rules most workers will have ________ of their salary deducted to pay for Social Security.

Accepted Answer

A)   1.45
B)   6.2%
C)   7.65%
D)   15.3%E) A) and B)
F) A) and C)

Question 7

A regular IRA requires taxes be paid at the time the money is removed from the plan.What is the after-tax value of a $5,000 deposit into an IRA today that generates an 8% return for 20 years if the investor is taxed at the 28% level?

Accepted Answer

A)   $16,779
B)   $20,135
C)   $21,685
D)   $23,305E) A) and B)
F) C) and D)

Question 8

Statistics show that life expectancy at age 65 for males is about ___ years and for females is about ___ years.

Accepted Answer

A)   15; 19
B)   17; 20
C)   18; 22
D)   19; 24E) None of the above
F) B) and C)

Question 9

What is the value of a $2,500 payment into an IRA,if the investment earns 12% per year for 15 years?

Accepted Answer

A)   $12,174
B)   $13,684
C)   $14,652
D)   $15,523E) C) and D)
F) B) and C)

Question 10

The Average Indexed Monthly Income is used to compute ___________.

Accepted Answer

A)   the consumer price index
B)   your Social Security retirement benefits
C)   your maximum 401k contribution
D)   your maximum IRA contributionE) B) and C)
F) All of the above

Question 11

The Social Security system _______________.

Accepted Answer

A)   is financed in a regressive way
B)   is regressive in the way it allocates benefits
C)   is progressive in the way it is financed
D)   is fully funded for the foreseeable futureE) All of the above
F) A) and B)

Question 12

As you get older you decide to reduce the risk level of your retirement portfolio because your portfolio is nearing your minimum acceptable level.As the portfolio does better you reallocate funds into higher risk categories.You are practicing a form of ____________.

Accepted Answer

A)   manipulating tax shelters
B)   involuntary, intergenerational transfers
C)   excessive savings
D)   dynamic hedgingE) A) and C)
F) All of the above

Question 13

A person in excellent health with a long life expectancy chooses a lifetime annuity.This is an example of _________.

Accepted Answer

A)   moral hazard
B)   adverse selection
C)   a Texas hedge
D)   actuarial errorE) All of the above
F) B) and C)

Exam 21: Taxes,inflation,and Investment Strategy

Today most employees receive retirement benefits in the form of ________.

Correct Answer
verified

Statistics show that life expectancy at age 65 for males is about _ years and for females is about _ years.

Correct Answer
verified

A regular IRA requires taxes be paid at the time the money is removed from the plan.What is the after-tax value of a $5,000 deposit into an IRA today that generates an 8% return for 20 years if the investor is taxed at the 28% level?

Correct Answer
verified

A person in poor health trying to buy supplemental health insurance is an example of ________.

Correct Answer
verified

Tax shelters __________________.

Correct Answer
verified

What is the value of a $2,500 payment into an IRA,if the investment earns 12% per year for 15 years?

Correct Answer
verified

As you get older you decide to reduce the risk level of your retirement portfolio because your portfolio is nearing your minimum acceptable level.As the portfolio does better you reallocate funds into higher risk categories.You are practicing a form of ____________.

Correct Answer
verified

The Average Indexed Monthly Income is used to compute ___________.

Correct Answer
verified

The Social Security system _______________.

Correct Answer
verified

You earned 8% on your corporate bond portfolio this year and you are in a 15% federal tax bracket.If over your holding period inflation was 3% your real after-tax rate of return was _____.

Correct Answer
verified

A person in excellent health with a long life expectancy chooses a lifetime annuity.This is an example of _________.

Correct Answer
verified

Under current rules most workers will have ________ of their salary deducted to pay for Social Security.

Correct Answer
verified

An investor in the 34% tax bracket would be indifferent between a corporate bond with a before tax yield of 8% and a municipal bond with a yield of _________.

Correct Answer
verified

Exam 21: Taxes,inflation,and Investment Strategy

Today most employees receive retirement benefits in the form of ________.

Correct AnswerverifiedShow Answer

Statistics show that life expectancy at age 65 for males is about ___ years and for females is about ___ years.

Correct AnswerverifiedShow Answer

A regular IRA requires taxes be paid at the time the money is removed from the plan.What is the after-tax value of a $5,000 deposit into an IRA today that generates an 8% return for 20 years if the investor is taxed at the 28% level?

Correct AnswerverifiedShow Answer

A person in poor health trying to buy supplemental health insurance is an example of ________.

Correct AnswerverifiedShow Answer

Tax shelters __________________.

Correct AnswerverifiedShow Answer

What is the value of a $2,500 payment into an IRA,if the investment earns 12% per year for 15 years?

Correct AnswerverifiedShow Answer

As you get older you decide to reduce the risk level of your retirement portfolio because your portfolio is nearing your minimum acceptable level.As the portfolio does better you reallocate funds into higher risk categories.You are practicing a form of ____________.

Correct AnswerverifiedShow Answer

The Average Indexed Monthly Income is used to compute ___________.

Correct AnswerverifiedShow Answer

The Social Security system _______________.

Correct AnswerverifiedShow Answer

You earned 8% on your corporate bond portfolio this year and you are in a 15% federal tax bracket.If over your holding period inflation was 3% your real after-tax rate of return was _____.

Correct AnswerverifiedShow Answer

A person in excellent health with a long life expectancy chooses a lifetime annuity.This is an example of _________.

Correct AnswerverifiedShow Answer

Under current rules most workers will have ________ of their salary deducted to pay for Social Security.

Correct AnswerverifiedShow Answer

An investor in the 34% tax bracket would be indifferent between a corporate bond with a before tax yield of 8% and a municipal bond with a yield of _________.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Statistics show that life expectancy at age 65 for males is about _ years and for females is about _ years.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified