Claire Has Contributed to a Roth IRA for the Last

question 56

Multiple Choice

Claire has contributed to a Roth IRA for the last several years. She is now in her late sixties and has just retired. She plans to withdraw $3,000 this year from her Roth IRA. If she is in the 25 percent tax bracket, how much tax will she have to pay on her withdrawal?

• A) $ 750
• B) $1,000
• C) $2,250
• D) She will not owe any taxes on this withdrawal.

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Definitions:

Exercise Price

The predetermined price at which an option can be exercised, allowing the holder to buy or sell the underlying asset.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government bonds.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time.

Exercise Price

The exercise price is the specified price at which the option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.