3/29/22 RLFM Exam 3 over 7.6 Capital Gains

Income that has not been worked for such as interest, dividends, or gambling winnings

• disposable income

• unearned income

• earned income

• workers compensation

One of the benefits of holding an investment for

over a year rather than selling it in less than a

year is that the

• capital gains on the investment will be taxed at a

  lower rate.

• fees will not be charged by brokers for selling the investment.

• money earned on the investment will be considered tax-free.

• profits on the investment can be averaged over

  the length of time the investment is held.

Certificate of Deposit

(CD)

• A savings deposit that has a lower rate of return, but you can access the money at any time

• A savings account that is invested in the stock market

• Common Dementia

• A savings deposit that has a higher rate of interest, this deposit cannot be withdrawn until the time frame has been completed

What are two purposes for investing? (select two)

• growing wealth

• avoiding taxes

• saving for emergencies

• saving for long-term goals

When should you begin investing so that you can take advantage of compound interest?

• as early as possible

• when your career is established

• after making over $100,000

• around age 50

If Jim invests $500 into stocks that he sells for $1,200, what was the return on his investment?

• $500

• $700

• $1,200

• $1,900

Profits from investing in rental property is added to which of the following to calculate income tax?

• Short Term Capital Gains

• Long Term Capital Gains

• Earned Income

• Unearned Income

Which of the following investments tends to be the most volatile and risky but offers the possibility of high rates of return?

• Stock

• Bond

• Mutual Fund

• Money Market

The money made from selling a stock investment is called _____.

• commission

• liquidity

• capital gains

• bond

Which type of retirement account is set up for workers by their employers who may match a certain percentage of their contributions?

• 401(k)

• IRA

• Mutual fund

• Flexible Savings Account