![Page 1: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/1.jpg)
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1)
![Page 2: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/2.jpg)
The principal shortcoming of the sole proprietorship is the owner's legal liability for all obligations of the business.
![Page 3: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/3.jpg)
1)
![Page 4: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/4.jpg)
_______ 2)
![Page 5: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/5.jpg)
A partnership is similar to a sole proprietorship except there is more than one owner.
![Page 6: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/6.jpg)
2)
![Page 7: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/7.jpg)
_______ 3)
![Page 8: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/8.jpg)
In a sole proprietorship, the owner is personally responsible for only the first $335,000 of the company's debt.
![Page 9: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/9.jpg)
3)
![Page 10: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/10.jpg)
_______ 4)
![Page 11: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/11.jpg)
There are no general partners in a limited partnership.
![Page 12: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/12.jpg)
4)
![Page 13: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/13.jpg)
_______ 5)
![Page 14: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/14.jpg)
The ownership of a corporation can be transferred more easily than can the ownership of an individual proprietorship or partnership.
![Page 15: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/15.jpg)
5)
![Page 16: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/16.jpg)
_______ 6)
![Page 17: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/17.jpg)
If a corporation goes bankrupt, the shareholders are responsible for the debts the corporation had incurred above and beyond their initial investment.
![Page 18: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/18.jpg)
6)
![Page 19: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/19.jpg)
_______ 7)
![Page 20: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/20.jpg)
At present, corporations with taxable income between $335,000 and $10,000,000 pay an effective (or average) 34 percent rate on all their taxable income.
![Page 21: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/21.jpg)
7)
![Page 22: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/22.jpg)
_______ 8)
![Page 23: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/23.jpg)
Corporations with taxable incomes less than $75,000 face an effective (or average) tax rate of 15 percent.
![Page 24: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/24.jpg)
8)
![Page 25: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/25.jpg)
_______ 9)
![Page 26: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/26.jpg)
If a company must pay the alternative minimum tax (AMT), the tax rate will be 40 percent of minimum taxable income.
![Page 27: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/27.jpg)
9)
![Page 28: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/28.jpg)
_______
10)
![Page 29: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/29.jpg)
For the corporation, depreciation charges are deductible for tax purposes.
![Page 30: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/30.jpg)
10)
![Page 31: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/31.jpg)
______
11)
![Page 32: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/32.jpg)
A depreciable capital asset in a three-year property class (as published by the U.S. Treasury) is generally depreciated over four years.
![Page 33: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/33.jpg)
11)
![Page 34: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/34.jpg)
______
12)
![Page 35: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/35.jpg)
Equity financing has a tax advantage since dividends paid out to shareholders reduce a firm's taxable income.
![Page 36: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/36.jpg)
12)
![Page 37: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/37.jpg)
______
13)
![Page 38: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/38.jpg)
A corporation with $1,000,000 in taxable income, $10,000 of which is in the form of dividend income, normally owes federal taxes of $1,020 on the dividend income.
![Page 39: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/39.jpg)
13)
![Page 40: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/40.jpg)
______
14)
![Page 41: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/41.jpg)
A capital gain is the amount by which the proceeds from the sale of a capital asset exceeds its depreciated (tax) book value.
![Page 42: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/42.jpg)
14)
![Page 43: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/43.jpg)
______
15)
![Page 44: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/44.jpg)
For the corporation, interest received on corporate and Treasury securities is fully taxable at the federal level.
![Page 45: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/45.jpg)
15)
![Page 46: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/46.jpg)
______
16)
![Page 47: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/47.jpg)
A Subchapter S corporation allows its owners to be taxed as though it were a partnership, while still allowing them to keep the corporate form of organization.
![Page 48: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/48.jpg)
16)
![Page 49: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/49.jpg)
______
17)
![Page 50: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/50.jpg)
Financial markets exist because all economic units do not invest all their savings in real assets.
![Page 51: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/51.jpg)
17)
![Page 52: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/52.jpg)
______
18)
![Page 53: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/53.jpg)
In a market economy, funds are allocated based on the size of the economic unit in need of funds and the industry in which it operates.
![Page 54: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/54.jpg)
18)
![Page 55: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/55.jpg)
______
19)
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A new common stock issue would be sold in the primary capital market.
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19)
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______
20)
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Financial intermediaries make the financial markets more convenient but less efficient.
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20)
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______
21)
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Life insurance companies invest heavily in corporate bonds.
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21)
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______
22)
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All common stocks listed on an organized exchange are also traded in the OTC market.
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22)
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______
23)
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The greater the default risk of a security issuer, the greater the expected return of the security.
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23)
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______
24)
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A security rated B by Moody's or S&P has very little default risk.
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24)
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______
25)
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The more marketable a security, the faster it can be sold without reducing its price.
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25)
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______
26)
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A yield curve shows the relationship between risk and yield on a graph.
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26)
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______
27)
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The higher the expected rate of inflation, the higher the nominal yield on securities.
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27)
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______
28)
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A limited liability company (LLC) generally must possess three or more corporate characteristics from 1) limited liability, 2) centralized management, 3) unlimited life, or 4) the ability to transfer ownership without the prior consent of the other owners.
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28)
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______
29)
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Short-term interest rates fluctuate more than long-term interest rates.
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29)
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______
30)
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A parallel limited liability company structure for service professionals is called the professional limited liability company (PLLC).
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30)
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______
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
31)
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Which of the following is correct with regard to a sole proprietorship?
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31)
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______ A)
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The owner is personally liable for all business obligations, including any lawsuits brought against the business.
B)
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Transfer of ownership is considerably easier than with any other form of business organization. C)
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Fringe benefits are legitimate business expenses and therefore deductible for tax purposes. D)
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Double taxation is imposed, meaning that the owner pays income taxes first on the income of the business, then again as personal income.
32)
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Which of the following statements is not correct with respect to the partnership as a form of business organization?
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32)
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______ A)
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Limited partners do not participate in the day-to-day operation of the business. B)
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It is similar to a sole proprietorship in all aspects except that there is more than one owner. C)
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Decision-making in a partnership is streamlined and generally efficient. D)
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A limited partnership must have at least one general partner.
33)
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A limited partnership gets its name from the fact that the ________.
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33)
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______ A)
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limited partner participates in the daily management of the business, even though the partner's liability for the debts and obligations of the business is limited
B)
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distribution of profits to the limited partner is capped by the amount of capital contributed to the business
C)
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limited partner does not participate in the daily operation of the business and his or her liability is limited to the amount of capital contributed to the business
D)
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limited partner does not participate in the day-to-day management of the business, even though the partner's liability for the obligations of the firm is unlimited
34)
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Which of the following is not correct with respect to the corporate form of business organization?
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34)
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______ A)
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Corporations tend to be relatively larger (based on assets) than either partnerships or proprietorships. B)
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Limited liability is a feature of corporate ownership. C)
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The corporation is the easiest form of business to organize. D)
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The corporation is the most important form of business organization today.
35)
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A major advantage of the corporation relative to other forms of business organization is ________.
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35)
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______ A)
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lower cost to organize
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B)
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limited owner liability C)
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reduction of double taxation
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D)
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higher credit ratings
Corporate Taxable IncomeAt Least But Less than Tax Rate$ 0 $ 50,000 15% 50,000 75,000 25% 75,000 100,000 34% 100,000 335,000 39% 335,000 10,000,000 34%10,000,000 15,000,000 35%15,000,000 18,333,333 38%18,333,333 ---------- 35%
36)
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Corporation XYZ has taxable income of $70,000 for the current year. It will owe taxes of ________.
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36)
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______ A)
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$11,250.
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B)
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$25,500.
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C)
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$12,500.
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D)
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$18,750.
37)
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Corporation XYZ has taxable income of $70,000 for the current year. The effective (or average) tax rate is closest to ________.
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37)
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______ A)
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40.0%
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B)
![Page 144: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/144.jpg)
25.0%
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C)
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15.0%
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D)
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17.9%
38)
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A corporation with taxable income of $20,000,000 finds itself in which marginal tax bracket?
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38)
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______ A)
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15 percent
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B)
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25 percent C)
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40 percent
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D)
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35 percent
39)
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A corporation has taxable income of $12,000,000 for the current year. The effective (or average) tax rate is closest to ________.
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39)
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______ A)
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34.6%
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B)
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34.0%
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C)
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34.2%
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D)
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35.0%
Corporate Taxable IncomeAt Least But Less than Tax Rate$ 0 $ 50,000 15% 50,000 75,000 25% 75,000 100,000 34% 100,000 335,000 39% 335,000 10,000,000 34%10,000,000 15,000,000 35%15,000,000 18,333,333 38%18,333,333 ---------- 35%
40)
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Refer to the table above. ABC Inc., has taxable income of $1.4 million in the current year. It will owe taxes of ________.
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40)
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______ A)
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$546,000
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B)
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$476,000
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C)
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$456,750
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D)
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$375,000
41)
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U.S. corporations are required to pay ________.
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41)
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______ A)
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estimated annual taxes paid quarterly B)
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actual annual taxes by December 31 C)
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estimated annual taxes by March 15 D)
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25 percent of their taxes in a given year and 75 percent by the subsequent March 15
42)
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Under the Revenue Reconciliation Act of 1993, ________.
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42)
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______ A)
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corporate income is taxed at the personal income rate B)
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the marginal tax rate becomes less with each increase in income bracket C)
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capital gains are taxed at the ordinary corporate tax rate, or a maximum of 35 percent D)
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the highest marginal tax rate for corporations is 50 percent
43)
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Suppose an asset costs $20,000 and has a depreciable life of five years. If the firm used the straight-line method of depreciation, depreciation charges during the second year would be ________.
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43)
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______ A)
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$6,400
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B)
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$4,000
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C)
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$4,800
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D)
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$8,000
44)
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A corporation receives $35,000 in dividend income. If it is in the 34 percent marginal tax bracket, the tax on the dividend income alone generally amounts to ________.
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44)
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______ A)
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$6,800
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B)
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$3,570
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C)
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$9,520
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D)
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$11,900
45)
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MNM Corporation owns 22 percent of the stock of WMW Company and receives dividends on that stock. If it does not file a consolidated tax return, MNM must pay taxes on ________ percent of the dividend received.
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45)
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______ A)
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20
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B)
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80
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C)
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30
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D)
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70
46)
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If a corporation has an operating loss, it can be ________.
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46)
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______ A)
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carried back 2 years and then forward 2 years B)
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carried back 2 years and then forward 20 years C)
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carried back 20 years and the forward 2 years D)
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used to offset long-term capital gains
47)
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The "carryback and carryforward" provision of the tax law applies to ________.
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47)
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______ A)
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corporations only B)
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corporations, partnerships, and proprietorships C)
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proprietorships only D)
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corporations and partnerships only
48)
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A corporation purchases a depreciable asset for $100,000. The asset has a five-year class life and is depreciated using the MACRS method. If it is sold for $120,000 after two years, the capital gain on the sale is ________.
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48)
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______ A)
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$20,000
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B)
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$56,400
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C)
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$84,000
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D)
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zero
49)
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Which of the following statements does not apply to the personal income tax structure?
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49)
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______ A)
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Interest received on municipal securities is fully taxable at the Federal level. B)
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Interest received on Treasury securities is fully taxable at the Federal level. C)
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Realized capital gains are taxed at a variety of rates depending on the holding period length. D)
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Interest received on corporate securities is fully taxable at the Federal level.
50)
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The owner of a Subchapter S corporation ________.
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50)
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______ A)
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has unlimited liability for the debts of the organization B)
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is taxed as if the corporation is a partnership C)
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does not avoid the double taxation normally associated with dividend income D)
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may not deduct any corporate operating losses against personal income on a pro rata basis
51)
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Which of the following is a financial asset?
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51)
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______ A)
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a building
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B)
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equipment C)
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inventories
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D)
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bonds
52)
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The purpose of financial markets is to ________.
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52)
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______ A)
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control inflation B)
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lower the yield on bonds C)
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allocate savings efficiently D)
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increase the price of common stocks
53)
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A 30-year corporate bond issued in 1985 would now trade in the ________.
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53)
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______ A)
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primary money market
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B)
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secondary capital market C)
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primary capital market
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D)
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secondary money market
54)
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Which of the following is not a financial intermediary?
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54)
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______ A)
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Apple Computer Corporation B)
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Chase Manhattan Bank C)
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Prudential Insurance Company D)
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Home Federal Savings & Loan
55)
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Which of the following financial intermediaries invests heavily in corporate bonds?
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55)
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______ A)
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property and casualty insurance companies B)
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finance companies C)
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savings and loan associations D)
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life insurance companies
56)
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When a company decides to raise funds by issuing new stocks or bonds, it usually uses the services of ________.
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56)
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______ A)
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an investment banker
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B)
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a mortgage banker C)
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a commercial banker
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D)
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an organized exchange
57)
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The expected return on a security typically increases as ________.
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57)
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______ A)
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taxability decreases
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B)
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maturity increases C)
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default risk decreases
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D)
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marketability increases
58)
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A security with which of the following Moody's ratings would have the lowest yield, other things equal?
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58)
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______ A)
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Ca
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B)
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B
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C)
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Aaa
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D)
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Baa
59)
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The term structure of interest rates refers to the relationship between yield and ________.
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59)
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______ A)
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risk, for securities with the same maturity B)
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rating, for securities with the same maturity C)
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maturity, for the same security class D)
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marketability, for securities with the same tax status
60)
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When inflation is expected to occur over the foreseeable future, the nominal rate of interest on a security will be ________ the real rate of interest.
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60)
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______ A)
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equal to
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B)
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half C)
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more than
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D)
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less than
61)
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An investor is concerned about the ability to resell a security after holding it for a short period of time without a major price concession. The investor is concerned about ________.
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61)
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______ A)
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marketability
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B)
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maturity C)
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default risk
![Page 350: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/350.jpg)
D)
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taxability
62)
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Which of the following characteristics is most likely to be found in a limited liability company (LLC)?
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62)
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______ A)
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unlimited liability
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B)
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ease of ownership transfer C)
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centralized management
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D)
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unlimited life
63)
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Which of the following pairs of characteristics is least likely to be found with a limited liability company (LLC)?
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63)
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______ A)
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centralized management and unlimited life B)
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ease of ownership transfer and unlimited life C)
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limited liability and unlimited life D)
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centralized management and limited liability
64)
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Money market mutual funds ________.
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64)
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______ A)
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are available only to wealthy individuals B)
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are involved in acquiring and placing mortgages C)
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are also known as finance companies D)
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enable individuals and small businesses to invest indirectly in money-market instruments
65)
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Assume that a recent temporary (U.S. federal tax related) first-year bonus depreciation of 50 percent applies to a new, $150,000 piece of equipment purchased by Rattatier Clothier, Inc. The asset has a $15,000 estimated final salvage value. If this asset is fully depreciated for tax purposes over its useful life, the overall amount that Rattatier will have depreciated for tax purposes is closest to ________.
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65)
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______ A)
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$54,000
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B)
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$150,000
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C)
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$135,000
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D)
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$60,000
66)
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A ________ generally possesses no more than two of the following characteristics 1) limited liability, 2) centralized management, 3) unlimited life, or 4) the ability to transfer ownership without the prior consent of the other owners.
![Page 386: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/386.jpg)
66)
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______ A)
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limited liability company (LLC) B)
![Page 389: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/389.jpg)
sole proprietorship C)
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corporation D)
![Page 391: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/391.jpg)
All of the above generally possess two or fewer of the above business characteristics
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
67)
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Dolly Dayton holds 1000 shares of Richfield Mining stock. Her dividend received for the current tax year is $5,000. If Dolly has a 15 percent marginal tax rate, what would her federal taxes be on this dividend?
![Page 393: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/393.jpg)
67)
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_____________
68)
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Ken Vicars maintains a portfolio of stocks and bonds in order to supplement his income as a salesman. Last year, he received $1,500 in interest on his City of Dallas municipal bonds, $1,000 in interest on Treasury bonds, and $3,100 in dividends on common stock. In addition, he sold stock and realized a long-term gain of $5,000. If Ken is single, and in the 28 percent marginal tax bracket, what taxes will he pay on his investment income and gains?
![Page 396: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/396.jpg)
68)
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_____________
69)
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This year, Kelso Construction, Inc. had taxable income of $1,000,000. Calculate its federal income tax.
![Page 399: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/399.jpg)
69)
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_____________
70)
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Harris Industries, Inc. owns $1 million in 10 percent Tripoli Products bonds and 20,000 shares of Tripoli common stock. There are 5 million shares of Tripoli common stock outstanding. During the past year, Tripoli paid the interest on its bonds, as well as a $5 per share dividend on its common stock. If Harris has a marginal tax rate of 34 percent, what taxes must it pay on the dividend and interest income?
![Page 402: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/402.jpg)
70)
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_____________
71)
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A restaurant buys new kitchen equipment that falls in the 3-year property class. If the equipment costs $30,000, what are the MACRS depreciation charges?
![Page 405: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/405.jpg)
71)
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_____________
72)
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A company buys a $10,000 piece of equipment that falls in the 5-year property class. What are the MACRS depreciation charges?
![Page 408: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/408.jpg)
72)
![Page 409: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/409.jpg)
_____________
73)
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Calculate the taxes paid and/or refunds received for a corporation with the following taxable income:Year 1: $75,000Year 2: $380,000Year 3: 0Year 4: $45,000Year 5: -$40,000
![Page 411: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/411.jpg)
73)
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_____________
74)
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Parks Promotions, Inc. is able to borrow at an interest rate of 11 percent for one year. During that year, market participants expect 6 percent inflation.
a. What approximate real rate of return does the lender expect?b. If inflation proves to be 4 percent for the year, does the lender suffer? Does the borrower suffer?c. If inflation proves to be 8 percent, who gains and who loses?
![Page 414: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/414.jpg)
74)
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_____________
75)
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A $10,000 asset in the five-year property class is depreciated using the MACRS method. The half-year convention is employed in the first year. What are the depreciation charges in each of the years?
![Page 417: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/417.jpg)
75)
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_____________
![Page 419: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/419.jpg)
1)
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TRUE 2)
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TRUE 3)
![Page 422: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/422.jpg)
FALSE 4)
![Page 423: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/423.jpg)
FALSE 5)
![Page 424: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/424.jpg)
TRUE 6)
![Page 425: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/425.jpg)
FALSE 7)
![Page 426: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/426.jpg)
TRUE 8)
![Page 427: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/427.jpg)
FALSE 9)
![Page 428: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/428.jpg)
FALSE 10)
![Page 429: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/429.jpg)
TRUE 11)
![Page 430: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/430.jpg)
TRUE 12)
![Page 431: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/431.jpg)
FALSE 13)
![Page 432: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/432.jpg)
TRUE 14)
![Page 433: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/433.jpg)
FALSE 15)
![Page 434: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/434.jpg)
TRUE 16)
![Page 435: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/435.jpg)
TRUE 17)
![Page 436: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/436.jpg)
TRUE 18)
![Page 437: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/437.jpg)
FALSE 19)
![Page 438: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/438.jpg)
TRUE 20)
![Page 439: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/439.jpg)
FALSE 21)
![Page 440: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/440.jpg)
TRUE 22)
![Page 441: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/441.jpg)
FALSE 23)
![Page 442: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/442.jpg)
TRUE 24)
![Page 443: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/443.jpg)
FALSE 25)
![Page 444: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/444.jpg)
TRUE 26)
![Page 445: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/445.jpg)
FALSE 27)
![Page 446: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/446.jpg)
TRUE 28)
![Page 447: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/447.jpg)
FALSE 29)
![Page 448: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/448.jpg)
TRUE 30)
![Page 449: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/449.jpg)
TRUE 31)
![Page 450: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/450.jpg)
A 32)
![Page 451: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/451.jpg)
C 33)
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C 34)
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C 35)
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B 36)
![Page 455: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/455.jpg)
C 37)
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D 38)
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D 39)
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C 40)
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B 41)
![Page 460: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/460.jpg)
A 42)
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C 43)
![Page 462: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/462.jpg)
B 44)
![Page 463: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/463.jpg)
B 45)
![Page 464: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/464.jpg)
A 46)
![Page 465: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/465.jpg)
B 47)
![Page 466: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/466.jpg)
A 48)
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A 49)
![Page 468: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/468.jpg)
A 50)
![Page 469: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/469.jpg)
B 51)
![Page 470: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/470.jpg)
D 52)
![Page 471: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/471.jpg)
C 53)
![Page 472: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/472.jpg)
B 54)
![Page 473: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/473.jpg)
A 55)
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D 56)
![Page 475: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/475.jpg)
A 57)
![Page 476: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/476.jpg)
B 58)
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C 59)
![Page 478: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/478.jpg)
C 60)
![Page 479: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/479.jpg)
C 61)
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A 62)
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C 63)
![Page 482: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/482.jpg)
B 64)
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D 65)
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B 66)
![Page 485: 40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com40p6zu91z1c3x7lz71846qd1-wpengine.netdna-ssl.com/wp-content/uplo… · Web viewA _____ generally possesses no more than two of the](https://reader031.vdocuments.net/reader031/viewer/2022020416/5ce59c3b88c993596d8bb553/html5/thumbnails/485.jpg)
A 67)
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Dividends are taxed at the ordinary income tax rate: ($5,000)(0.15) = $750. 68)
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The municipal bond income is not taxable and the Tax Reform Act of 1986 made long-term capital gains subject to ordinary income tax rates. This is still the case under the Revenue Reconciliation Act of 1993.Total taxes: (0.28)($1,000 + $3,100 + $5,000) = $2,548
69)
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Corporations with income between $335,000 and $10,000,000 are subject to a flat 34 percent tax rate: (0.34)($1,000,000) = $340,000
70)
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All of the bond interest is taxable but only 30 percent of the stock dividends are taxable.Total taxes: ($100,000)(0.34) + ($100,000)(0.30)(0.34) = $44,200
71)
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Year 1: ($30,000)(0.3333) = $ 9,999Year 2: ($30,000)(0.4445) = $13,335Year 3: ($30,000)(0.1481) = $ 4,443Year 4: ($30,000)(0.0741) = $ 2,223
72)
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Year 1: ($10,000)(0.2000) = $2,000Year 2: ($10,000)(0.3200) = $3,200Year 3: ($10,000)(0.1920) = $1,920Year 4: ($10,000)(0.1152) = $1,152Year 5: ($10,000)(0.1152) = $1,152Year 6: ($10,000)(0.0576) = $ 576
73)
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Year 1: $13,750Year 2: ($380,000)(0.34) = $129,200Year 3: 0Year 4: ($45,000)(0.15) = $6,750Year 5: The $40,000 loss is carried back 1 year to Year 4. Note that we could go back up to 2 years, but the firm did not have taxable income in Year 3.
Tax recomputed: ($45,000 - 40,000)(0.15) = $750Refund received in Year 5: $6,750 - $750 = $6,000
74)
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a. Nominal Rate - Inflation Rate = Real Rate11 percent - 6 percent = 5 percentb. The lender benefits because the real return was actually 7% (11% - 4%) when the risk and maturity characteristics of the loan only warranted a 5% real return. Parks Promotions suffers, because if inflation had been anticipated accurately, the loan would only have cost 5% real rate plus 4% inflation = 9%.c. Parks Promotions gains, because if inflation had been anticipated accurately, the loan would have cost 5% real rate + 8% inflation = 13%. The lender has to absorb the loss in purchasing power.
75)
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Year 1: ($10,000)(0.2000) = $2,000Year 2: ($10,000)(0.3200) = $3,200Year 3: ($10,000)(0.1920) = $1,920Year 4: ($10,000)(0.1152) = $1,152Year 5: ($10,000)(0.1152) = $1,152Year 6: ($10,000)(0.0576) = $ 576