If Riko Takes Out a One-Year Loan of $2,000 with a 10

question 50

Multiple Choice

If Riko takes out a one-year loan of $2,000 with a 10 percent annual interest rate, the price she will pay for borrowing is:

• A) $2,000.
• B) $2,200.
• C) $200.
• D) $2,400.

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Definitions:

Preferential Tax Rates

Lower tax rates applied to specific types of income, such as capital gains or qualified dividends, which are taxed at a different rate than ordinary income.

Capital Gains

The profit from the sale of property or an investment when the selling price exceeds the original purchase price.

Capital Losses

The loss incurred when a capital asset (like stocks or real estate) is sold for less than its purchase price.

Capital Gain Distributions

The payments made to mutual fund shareholders from the fund's sale of stocks or assets, subject to capital gains taxes.