Generally, Which of the Following Does Not Correctly Categorize the Type

question 33

Multiple Choice

Generally, which of the following does not correctly categorize the type of income?

• A) salary − active income/loss
• B) rental real estate − passive income/loss
• C) capital losses − passive income/loss
• D) dividends − portfolio income/loss
• E) All of the choices are correct.

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Definitions:

Semi-annually Compounded

Relating to the process in which the interest on a loan or investment is calculated and added to the principal amount twice a year.

Effective Annual Rate

A measure of the true interest rate accounting for the effects of compounding over a year.

Contributions

Amounts given or donated to a particular cause, project, or for a retirement account.

Effective Rate of Return

A measure of the return on an investment that accounts for the effect of compounding over a specified time period.