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Question: What is the difference in tax rates


What is the difference in tax rates on long-term versus short-term capital gains?



> Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Recall that Brad is 30 years old. He also has a driving

> Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Recall that Brad is 30 years old. He also has a driving

> Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Recall that Brad is 30 years old. He also has a driving

> Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest it in stock. Dave and Sharon have never owned stock bef

> Brad Brooks listened to your advice about reducing the use of his smartphone (which saves him $250 per month) and reducing his entertainment expenses by $200 per month. He still rents the condo for $1,000 per month. However, now Brad has the urge to upgr

> What is an amortization table? What does each mortgage payment represent?

> What are the two financial components you must consider before purchasing a home? Why should you consider them?

> Explain how stronger economic conditions affect the values of homes.

> Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an additional $300 per month over the last year for their chil

> Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an additional $300 per month over the last year for their chil

> What are stock exchanges? How do they facilitate the trading of stocks?

> The top managers of a publicly traded manufacturing company are reviewing the projected fourth quarter financial results in late November. Based on the projected sales, the company will fall short of its yearly profit goals. This will result in the compa

> What are some limitations of stock analysis?

> What is technical analysis? What is fundamental analysis?

> Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest it in stock. Dave and Sharon have never owned stock bef

> What determines stock price? How do investors use this information to make buy or sell decisions?

> What is the OTC? What is the role of a market maker?

> How can another country’s economic conditions affect a U.S. firm and therefore its stock price?

> What is a short sale? When would this strategy be used?

> Why is an industry analysis of stocks important? List some sources of information about firms and their industry.

> What is inflation? How is inflation measured? How does inflation affect stock prices?

> How do interest rates affect economic growth? Why do interest rates affect some stock prices more than others? Which federal agency influences interest rates?

> Explain how economic growth is measured. How does economic growth affect stock prices? What are some popular indicators of economic growth? How does the government’s fiscal policy affect economic growth?

> Why may the top managers of a firm be tempted to use misleading estimates of revenues and expenses? How may managers be able to boost the reported earnings of their firm?

> List the characteristics of a firm that investors analyze by using the balance sheet and the income statement.

> Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest it in stock. Dave and Sharon have never owned stock bef

> Why is it necessary to analyze a firm? What is an annual report? What information does it contain to aid the analysis?

> What is buying a stock on margin? What may happen if the value of the stock bought on margin declines? What are the advantages to investors and brokerage firms when stocks are bought on margin?

> Discuss the differences between a market order, a limit order, and a stop order.

> What information must you provide when placing an order to buy or sell stock? What is a ticker symbol, and why is it important?

> What are some advantages of using online brokerage services? Describe how an investor would set up and use an online brokerage account.

> How is the market for a stock created? How do brokerage firms expedite this process? Compare the two types of brokerage services.

> What are electronic communications networks (ECNs)? How are ECNs used?

> Describe a typical stock transaction at the New York Stock Exchange (NYSE). What are floor traders? What are specialists? What other exchanges trade stocks in a similar manner to the NYSE?

> What are stocks? How are stocks beneficial to corporations? Why do investors invest in stocks?

> How does your personal tolerance for risk impact your investment decisions?

> How is investing related to your personal financial goals?

> What is an IPO? What are the risks associated with buying IPOs?

> What is a growth stock? What is an income stock? Why would investors prefer one type over the other?

> What is an exchange traded fund? How does it differ from a mutual fund?

> How is investing related to liquidity? Give some examples of liquid investments.

> Describe common investment mistakes made by individuals.

> How can you limit your risk through diversification?

> Describe the return-risk trade-offs among bonds, mutual funds, and real estate investments.

> What is the return-risk trade-off? What types of stock investments are particularly tempting for stock investors? What other factors must individual investors consider before making this type of investment?

> Why do investors measure risk? Describe the two common measures of risk.

> Define the risk of an investment. What types of firms are particularly risky?

> Describe how economic conditions might affect certain investments.

> How can investments in stock increase your wealth? How would you calculate the value of a stock investment of a single sum over time? How would you calculate the value of a stock investment of a specific amount over several periods?

> What is the formula for estimating returns on dividend-paying stocks? Describe each element of the formula. How do you calculate the dollar amount of your returns?

> In what geographic areas is the price of land relatively high? What components make up the return from investing in real estate?

> How do mutual funds operate? Who manages mutual funds? How are coupon or dividend payments handled by the mutual fund? Can investors incur capital losses with mutual funds?

> What are bonds? How do bonds provide a return to investors?

> Discuss the differences between common stock and preferred stock.

> What type of firm typically pays dividends? What are growth stocks? What are income stocks?

> How do shareholders earn returns from investing in stocks? How is the market value of a firm determined? What determines the market price of a stock?

> Classify and describe the two types of investors. What are day traders?

> What are dividends? Do all firms pay them?

> Distinguish between the primary and secondary stock markets. Why does the price of a stock change each day in the secondary market?

> What is the dollar amount of Joel’s return (see problem 1)? Data from Problem 1: Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend checks amounting to $150. Joel recently sold the stock for $32 per share. What

> Thomas purchased 400 shares of stock A for $23 a share and sold them more than a year later for $20 per share. He purchased 500 shares of stock B for $40 per share and sold them for $53 per share after holding them for more than a year. Both of the sales

> Bob purchased stock in a new social media company for $40 per share shortly after the stock’s IPO. The stock had been heavily publicized on the Internet. Over the next three years, the stock price declined by 15% each year. What is the company’s stock pr

> How much would Joel (from problem 1) save in taxes if he held the stock for more than a year, assuming he sold it for the same amount? Data from Problem 1: Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend chec

> The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Dave’s death because he is the major breadwinner. The Sa

> The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Dave’s death because he is the major breadwinner. The Sa

> What are living benefits? When might a policyholder use this option?

> What is a beneficiary? Why is it important to periodically review your beneficiaries?

> What is an installment payments settlement? When would an insured individual choose this option?

> What is a lump-sum settlement? What kind of beneficiary would benefit the most from this option?

> What is mortgage life insurance? Is mortgage life insurance a good buy? Why or why not?

> Why is it important to evaluate the financial condition of a life insurance company?

> How do individuals benefit from having health insurance? Why has health insurance received a lot of attention recently?

> Recall that one of the Sampsons’ goals is to invest for their children’s future college education. To become more educated investors, they have been reviewing analyst and brokerage firm recommendations. Dave and Sharon are ready to invest in several stoc

> How are health insurance and disability insurance related to your wealth?

> How did the PPACA change the way insurance companies treat persons with preexisting conditions?

> What types of services are typically covered by vision insurance? Why should some individuals consider buying a separate vision insurance policy?

> What is a health savings account, or HSA? Why is this account often preferable to a flexible spending account?

> Briefly describe some of the significant features of the Affordable Care Act.

> Briefly describe some of the provisions of disability income insurance.

> Briefly describe some of the sources of disability income insurance.

> What are some other types of health insurance that might be offered by an employer?

> What is the purpose of long-term care insurance? What factors influence long-term care insurance premiums? What factors should be considered when purchasing long-term care insurance?

> What is Medicaid? How do individuals qualify for Medicaid?

> Recall that one of the Sampsons’ goals is to invest for their children’s future college education. To become more educated investors, they have been reviewing analyst and brokerage firm recommendations. Dave and Sharon are ready to invest in several stoc

> Briefly describe the provisions of the Medicare Prescription Act

> What is Medicare? Describe Parts A and B of Medicare.

> What is a flexible spending account? Why do some individuals allocate a minimal amount to this account?

> Briefly describe two federal regulations intended to ensure that individuals can maintain continuous health care coverage if their employment status changes

> Compare and contrast the discount on charge arrangement and the per diem arrangement associated with PPOs.

> What is a preferred provider organization (PPO)? How does it operate?

> What questions should you ask when considering an HMO or PPO?

> Describe how an HMO works. What are the advantages and disadvantages of this type of health care coverage?

> Compare and contrast private health care fee for service plans and managed health care plans.

> Who offers health insurance? Do employers offer health insurance?

> What is the purpose of life insurance? Do you think everyone needs life insurance? Explain.

> What should your first priority of investing be? What is the disadvantage of investments that satisfy that priority?

> What is private health insurance? Briefly describe some types of private health insurance coverage.

> Nancy’s employer provides her with two times her annual gross salary in life insurance. How much additional insurance should Nancy purchase based on the information in the previous problem?

> Nancy is a widow with two teenage children. Nancy’s gross income is $3,000 per month, and taxes take about 30% of her income. Using the income method, Nancy calculates she will need to purchase about eight times her disposable income in life insurance to

> What is a “cash value” homeowner’s policy? What is a “replacement cost” homeowner’s policy?

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