The Alternative Minimum Tax

question 67

Multiple Choice

The alternative minimum tax:

• A) is the tax rate paid on an additional dollar of income.
• B) has higher tax rates on people with higher incomes.
• C) is the total tax payment divided by total income.
• D) is a separate income tax code that began in 1969 to prevent the rich from not paying income taxes.

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Definitions:

In-The-Money Option

An option with an exercise price that is favorable compared to the current market price of the underlying asset.

Initial Investment

The initial amount of money spent to start a project, purchase an asset, or embark on a financial venture, prior to any earnings or gains.

Conversion Ratio

A specific number of shares a bondholder can receive for each bond if they choose to convert it into stock.

Market Value

The present cost at which a service or asset is available for purchase or sale in the market.