You Purchase a One-Year Security with an Expected Real Pretax

question 27

Multiple Choice

You purchase a one-year security with an expected real pretax return of 6%. You forecast a 4% rate of inflation and are in the 35% tax bracket. Your real after-tax return would be

• A) 6.1%.
• B) 1.4%.
• C) 2.6%.
• D) 7.0%.

---

Definitions:

Professional Activities

Tasks or duties performed as part of one's occupation or career, often requiring specialized knowledge or training.

Applied Research

Research aimed at solving practical problems rather than acquiring knowledge for knowledge's sake.

Basic Research

Research aimed at gaining a more comprehensive understanding of fundamental principles and theories.

Practical Problems

Issues or challenges that arise in everyday life or during the course of work that require solutions through practical means.