A Tax ____________ Is an Amount Subtracted Directly from the Amount

question 58

Multiple Choice

A tax ____________ is an amount subtracted directly from the amount of taxes owed.

• A)credit
• B)exemption
• C)deduction
• D)exclusion
• E)shelter

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Definitions:

Expected Capital Gains Yield

The anticipated rate of return from an investment due to an increase in its market price.

Reinvestment Rate Risk

Occurs when a short-term debt security must be “rolled over.” If interest rates have fallen, the reinvestment of principal will be at a lower rate, with correspondingly lower interest payments and ending value.

High-Coupon Bonds

Bonds that offer a higher-than-average interest rate (coupon) compared to others in the market, reflecting potentially higher risk.

Low-Coupon Bonds

Low-Coupon Bonds are bonds that have a lower interest rate than the prevailing market interest rate, typically making them sell at a discount to their face value.