Chapter 3 & 4 Homework

Chapter 3 & 4 Homework - These bills mature within...

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Kristen Porter 1/30/12 Tax 879 6. Gross Income: $50,770 Income from Limited Partnership $200 $610 Capital Loss ($2,025) $49,555 Less Adjustments to AGI: IRA Contribution ($5,000) Alimony Paid to First Wife ($6,000) AGI $38,555 Standard Deduction ($10,900) Personal Exemptions (3500X3) ($10,500) Taxable Income $17,155 7. A short-term investment vehicle that can be used to manage your cash resources is a CD. In a CD, the amount of money you deposit must remain on deposit for a specified length of time. If the funds are withdrawn too early a penalty will be applied. Generally, the longer the duration of the CD the higher the interest percentage paid on the principal is. Another short-term investment vehicle is U.S. Treasury bills.
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Unformatted text preview: These bills mature within three or six months. They can be sold at any time with no interest penalties applied, unlike CDs. U.S. Treasury bills pay interest on a discount basis. This means the interest paid is the difference between the purchase price and the value at maturity. If there was a concern the financial crisis would increase inflation significantly I would invest in I savings bonds. I savings bonds are issued by the U.S. Treasury and accrue semiannually for 30 years. The annual interest rate is determined by combining two elements: the fixed rate, which is the same for the life of the bond and a semi-annual inflation rate based on the CPI-U (consumer price index adjusted for inflation). Thus, returns are adjusted for inflation, offering a protection for your investment....
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