Which of the Following Items Does Not Result in a Permanent

question 30

Multiple Choice

Which of the following items does not result in a permanent difference?

• A) Domestic manufacturing deduction on the income tax return.
• B) Accelerated tax depreciation in excess of straight-line book depreciation.
• C) Dividend received deduction on the income tax return.
• D) Interest income from a tax-exempt municipal bond.

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Definitions:

Sharpe Measure

A metric used to assess the performance of an investment by adjusting for its risk.

Excess Returns

Returns earned by an asset that exceed the risk-free rate of return, indicating the additional gain from taking on risk.

Risk-free Asset

A financial instrument that is considered to have no risk of financial loss, typically issued by a government.

Sharpe Measure

A method to evaluate the risk-adjusted return of an investment, comparing portfolio excess return to the standard deviation of the portfolio.