Jason Marks Has to Pay His Tax by Instalments as a Result

question 52

Multiple Choice

Jason Marks has to pay his tax by instalments as a result of his significant investment in- come.His net tax owing in 2009 was $13,600.In 2010, it was $15,000.His estimate for 2011 is $17,000.If he decides to pay his 2011 tax instalments according to the prior year option, how much should he pay on September 15, 2011?

• A)$3,400.
• B)$3,750.
• C)$4,250.
• D)$6,500.

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Definitions:

Premium

An additional payment above the nominal or face value of a transaction, security, or insurance policy.

Option Contract

A contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a given date.

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified future date for a price agreed upon today.

Futures Contracts

Standardized legal agreements to buy or sell something at a predetermined price at a specified time in the future, often used for commodities or financial instruments.