Question

1. Which of the following are highly marketable?

a. stocks

b. bonds

c. real estate

d. a privately held business

e. both Answer 1 and Answer 2

2. ___ is/are not a liquid asset.

a. A savings account

b. Bond mutual funds

c. An interest-paying checking account

d. A checking account

e. A money market mutual fund

3.Generally which of these is considered best?

a.Above the line deduction.

b. Below the line deduction.

c. Refundable credit.

d. Non-refundable credit.

e. tax penalties

4. Which statement(s) are true

a. higher expected inflation would cause people to delay purchases

b. the shortcut for the fisher equation is to subtract the inflation rate from the nominal interest rate

c. the fisher equation is a way to calculate peoples risk tolerance

d. Both answer 1 and 2

e. Both answer 1 and 3

Answer 1

1.

e. both Answer 1 and Answer 2. Stocks and bonds are considered marketable securities because there is a public demand for them and they can be readily converted into cash. Marketable securities are liquid financial instruments that can be quickly converted into cash at a reasonable price.

2.

c. An interest-paying checking account. This is not as liquid as a traditional checking account

The money in your checking account, savings account, or money market account is considered liquid because it can be withdrawn easily to settle liabilities. Bond Mutual funds and money market mutual funds are considered liquid since investors can sell their shares at any time and receive their money within days.

3.

a.

Above-the-line deductions are generally more advantageous for a high income taxpayer than so-called below-the-line deductions. Below the line deductions are subtracted from a taxpayer's adjusted gross income. Above-the-line deductions may also be subject to income-sensitive phaseouts or limitations.Above-the-line deductions are also preferred because they can be taken by ALL taxpayers regardless of whether they take standard or itemized deductions

4.

b

The Fisher equation provides the link between nominal and real interest rates. To convert from nominal interest rates to real interest rates, we use the following formula:

real interest rate ≈ nominal interest rate − inflation rate.