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If a Friend Tells You That He Is Certain a Stock

question 80

Essay

If a friend tells you that he is certain a stock price will rise based on information he heard on television or saw on the Internet, should you be skeptical? Explain.


Definitions:

Average Tax Rate

The proportion of total income that is paid in taxes, calculated by dividing the total taxes paid by the total taxable income.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of additional income that will be taxed.

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed.

Total Income

The sum of all earnings received by an individual or entity, including wages, salaries, benefits, and income from investments.

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