Your Aunt Is Looking to Invest a Certain Amount Today

question 57

Multiple Choice

Your aunt is looking to invest a certain amount today. Which of the following choices should she opt for?

• A) three-year CD at 6.5% annual rate
• B) three-year CD at 6.75% annual rate
• C) three-year CD at 6.25% annual rate
• D) three-year CD at 7% annual rate

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Definitions:

Recognized Gain

The portion of gain that is subject to tax after the sale or exchange of an asset, calculated as the difference between the asset's adjusted basis and its sale price.

Liquidating Distributions

Payments made to shareholders or partners by a corporation or partnership as it dissolves, distributing its assets.

Computer Equipment

Devices and systems used in the operation, management, and functionality of computers, including both hardware and accessories.

Tax Consequences

The effect of financial transactions on an individual's or entity's tax liability.