You put $5,000 of your salary into a tax-advantaged account. In which account wo
ID: 2806778 • Letter: Y
Question
You put $5,000 of your salary into a tax-advantaged account. In which account would the money be taxed now at your current income tax bracket (i.e., you put in “after-tax” dollars)? a) Roth IRA b) Traditional IRA c) Company 401k pension plan d) 529 Plan
18. Which has the least price sensitivity to an interest (discount) rate change? All have the same face value.
a) a ten-year note with a 5% coupon
b) a ten-year note with a 7% coupon
c) a five-year with a 5% coupon
d) a twenty-year floating rate note
19. How are a Roth IRA and a Traditional IRA similar?
a) Both are intended for employees of companies.
b) Both are intended for self-employed people.
c) Savings that are put into each of these IRAs are never taxed.
d) Whichever is chosen will be an asset on the individual’s balance sheet.
Explanation / Answer
17.
In Roth IRA, the depositoe has to pay tax upfront that teh time they make investment. So effectively they put dollar is after tax dollar.So, account would the money be taxed now at your current income tax bracket is called Roth IRA account.
Option (A) is correct answer.
18.
A floating rate bond is considered as least sensitive bodn with respect to change in interest rate. If interest rate chnage in coupon rate of floating rate note will also change.
Option (D) is correct answer.
19.
Roth IRA and a Traditional IRA are similar term of Both are intended for employees of companies.
Option (A) is correct answer.
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