Carolyn Is Single and Has a College Degree in Finance

question 46

Multiple Choice

Carolyn is single and has a college degree in finance.She is employed as a loan officer at a bank;her yearly AGI approximates $50,000.During 2010,she enrolled in a weekend MBA program and incurred the following nonreimbursed expenses: $3,900 (tuition) ,$300 (books) ,$200 (other school supplies) ,and $200 (transportation to and from campus) .Disregarding the 2%-of-AGI limitation,as to the MBA program,Carolyn has a:

• A)Deduction for and deduction from AGI of $0.
• B)Deduction for AGI of $3,900 and deduction from AGI of $700.
• C)Deduction for AGI of $4,000 and deduction from AGI of $600.
• D)Deduction for AGI of $4,100 and deduction from AGI of $500.
• E)None of the above.

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Definitions:

Nominal Rate of Interest

The nominal interest rate on a loan or investment, before adjusting for inflation.

Real Rate of Interest

The real rate of interest is the rate of interest an investor expects to receive after allowing for inflation, reflecting the true earning potential of an investment.

Financial Risk

The risk of experiencing financial loss from an investment or business endeavor.

Insurable Risk

A risk that meets the criteria of an insurance policy, meaning it is possible to calculate both the probability and the potential cost of the risk.