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Assuming a 1 - year, money market account investment at 3 . 0 5 percent ( APY ) , a 1 . 6 5 percent
Assuming a year, money market account investment at percent APY a percent inflation rate, a percent marginal tax bracket, and a constant $ balance, calculate the aftertax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions?
Assuming a year, money market account investment at APY a marginal tax bracket, and a constant $ balance, the aftertax rate of return is Round to two decimal places.
Assuming a year, money market account investment at APY a marginal tax bracket, and a constant $ balance, the aftertax monetary return is $ Round to the nearest dollar.
Given an aftertax retum of and an inflation rate of the aftertax real rate of return is Round to two decimal places.
Given an aftertax return of and an inflation rate of the aftertax real monetary return is $
Round to the nearest dollar.
What is the implication of this result for cash management decisions? Select the best answer below.
A The implication is that it is difficult to do any more than keep up with taxes and inflation with liquid assets. Therefore, only the amount needed for financial emergencies and shortterm goals should be placed in assets with such a low riskreturn ratio. Additional funds should be invested elsewhere for a higher return.
B No implication can be drawn from this information.
C The implication is that it is difficult to do any more than keep up with taxes and inflation with money market account investments so these funds should be put in higheryielding investments like stocks and longterm bonds.
D The implication is that it is easy keep up with taxes and inflation with liquid assets. Therefore, not only should the amount needed for financial emergencies and shortterm goals be placed in liquid cash assets but additional funds should also be invested here.
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