The Real Rate of Return on a Taxable Investment Yielding

question 85

Multiple Choice

The real rate of return on a taxable investment yielding 12 percent annually would be ____ percent if the investor were in the 25 percent marginal tax bracket and inflation were 3 percent.

• A)6.00 percent
• B)6.48 percent
• C)8.64 percent
• D)9.00 percent

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Definitions:

Turnover Ratio

A financial metric that measures the rate at which an investment or a portfolio of investments is bought and sold over a particular period.

Average Daily Assets

The average value of assets held by an individual or entity over a specified period, calculated by averaging the asset values at the beginning and end of the period.

Mutual Fund

A financial tool that combines money from various investors to invest in a variety of assets including stocks, bonds, and money market instruments.

Turnover Ratio

A measure of the trading activity in a portfolio, indicating how often assets within the portfolio are bought and sold over a specific period.