An Individual Actually Earned a 4 Percent Nominal Return Last

question 52

Multiple Choice

An individual actually earned a 4 percent nominal return last year. Prices went up by 3 percent over the year. Given that the investment income was subject to a federal tax rate of 28 percent and a state and local tax rate of 6 percent,what was the investor's actual real after-tax rate of return?

• A)-0.36 percent
• B)0.66 percent
• C)2.64 percent
• D)0.72 percent
• E)1.45 percent

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Definitions:

Classical Conditioning

An educational technique involving the repetitive pairing of two stimuli, which results in a reaction initially caused by the second stimulus, being eventually provoked by just the first stimulus.

Neonate

Newborn baby, particularly within the first 28 days of life outside the womb.

Blink

A rapid closing and opening of the eyelid, which is a reflex action protecting the eye from irritants and helping to spread tears over the surface of the eye.

Peripheral Vision

The ability to see objects that are outside the direct line of vision, near the edges of the field of view.