Terrence Is in the 30% Tax Bracket

question 149

Multiple Choice

Terrence is in the 30% tax bracket. What is the after-tax cost of a $3,000 contribution to his traditional IRA account?

• A) $900
• B) $1,440
• C) $2,100
• D) zero

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Definitions:

Rate of Return

A financial metric used to calculate the percentage profit or loss of an investment relative to its cost.

Beta Risk

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Diversified Portfolio

An investment portfolio constructed to spread risk by selecting assets across various classes.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.