James Has Three Nieces,ages 11,16,and 19

question 3

Short Answer

James has three nieces,ages 11,16,and 19.His adjusted gross income for the year is $100,000.The maximum he can contribute to their Coverdell Education Savings Accounts is
$\begin{array}{cc}\text { Each Account } & \text { Total Contribution } \\a.\$ 1,333 & \$ 2,667 \\b.\$ 1,333 & \$ 4,000 \\c.\$ 2,000 & \$ 4,000 \\d.\$ 2,000 & \$ 6,000 \\e.\$ 6,000 & \$ 6,000\end{array}$

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Definitions:

Annual Coupon

The yearly interest payment paid to a bond's holders, typically expressed as a percentage of the bond's face value.

Par Value

The face value of a bond or the stock value stated in the corporate charter, often used as the legal capital per share of stock.

Reinvestment Rate Risk

The risk that the return on funds that are to be reinvested will not be at the same rate as the funds that were initially invested.

Zero Coupon Bond

A type of bond that does not pay periodic interest payments and is instead sold at a discount from its face value and matures at that face value.