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(a)Bradley hates taking risk with his money; I hate shares and property, I know a lot of people who have lost money in those investments.As

(a)Bradley hates taking risk with his money; "I hate shares and property, I know a lot of people who have lost money in those investments".As a result he will only consider bank guaranteed investments.Bank guaranteed investments are returning 1%.Bradley has a marginal tax rate of 32.5% and pays medicare levy of 2%.

  1. Assuming he pays tax at 32.5% plus medicare levy, on the income from his investment, is he preserving the real dollar value of his investment if inflation is 2.5% per annum?Show your workings to justify your answer.(2.5 marks)
  2. When considering your calculations, how would you explain the benefits of risk to Bradley?(2.5 marks)

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