Instruction 13.1: Use the Information to Answer the Following Question(s)

question 25

Multiple Choice

Instruction 13.1:
Use the information to answer the following question(s) .
In September 2009 a U.S. investor chooses to invest $500,000 in German equity securities at a then current spot rate of $1.30/euro. At the end of one year the spot rate is $1.35/euro.
-Refer to Instruction 13.1. At the end of the year the investor sells his stock that now has an average price per share of €57. What is the investor's average rate of return before converting the stock back into dollars?

• A) 5.0%
• B) -3.0%
• C) -5.0%
• D) 3.0%

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Definitions:

Casualty

A sudden, unexpected, or unusual event that causes damage or loss, often used in reference to natural disasters for tax deduction purposes.

Self-Employment Tax

This is a charge including Social Security and Medicare dues, principally aimed at those working independently.

Form 1040

Form 1040 is the U.S. federal income tax form used by individuals to file their annual income tax returns with the Internal Revenue Service (IRS).

Schedule SE

The tax form used by self-employed individuals to calculate the taxes owed on net earnings from self-employment.