Which of the Following Statements About Roth IRAs Is False

question 21

Multiple Choice

Which of the following statements about Roth IRAs is false?

• A)contributions made to a Roth IRA are not tax deductible, but are tax-free when withdrawn
• B)withdrawals of contributions made at any time are not subject to taxation
• C)withdrawals of investment earnings are not subject to taxation as long as the taxpayer is at least 55 years old and the Roth IRA has existed for at least five years
• D)withdrawals of investment earnings are not subject to taxation if they are used to (up to $10,000 worth)to buy a first home, and if the Roth IRA has existed for at least five years

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Definitions:

Black-Scholes Formula

A mathematical model used to estimate the price of European-style options, considering factors like the asset's price, time, volatility, and risk-free rate.

Straight Bond Value

The value of a bond that does not have any embedded options such as convertibility or callability, calculated based on its coupon payments and maturity value.

Conversion Price

The predetermined price at which convertible security, such as a convertible bond or preferred stock, can be converted into a specified amount of common stock.

Coupon

The annual interest rate paid on a bond, expressed as a percentage of the face value.