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Tax and Yields (Chapter 8.1-8.2 section 2 and 3) (DETAILED ANSWERS) 2024 - DISTINCTION
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Tax and Yields (Chapter 8.1-8.2 section 2 and 3) (DETAILED ANSWERS) 2024 - DISTINCTION
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8/1/24, 7:14 AM 1/2 from investment income? -Dividends and interest payments Tax and Yields (Chapter 8.1-8.2 section 2 and 3) Jeremiah Terms in this set (17) Tax and Yields (Chapter 8.1-8.2 section 2 and 3) Current Yield Formula Annual Income (dollars)/Current market value Current Yield example 0.25$ quarterly dividend ABC stock trading at 20$ a share 0.25x4=1 1$/$20=0.05=5% Total Return formula and example 4 0.25$ dividends is in 1$ income Bought stock for 20 sold at 21 Total return=(income + gains or losses( -))/Cost basis 1$ in income 1$ in capital gains total return=(1+1)/20=10% Capital gains and losses formula sales proceeds -adjusted cost basis Capital gains/losses example bought 100 shares at $22 a share 3 years ago Sold 100 shares at $25 dollars a share (25x100) -(22x100)= +300 (gain) Total return formula total return= (income+gains/losses)/cost basis What are the different types of income that make up ordinary income (3)? -Earned income -Investment income -Passive income What type of income is used to determine the income tax rate an investor will pay? Ordinary income What is considered earned income? Active participation in a trade or business including: -salary -wages -bonuses -tips What type of income is IRA contributions based off of? Earned income What is investment income? What is it also referred to as? What type of payment comes -Income earned from one's investments -Portfolio incomeThe benefits of buying summaries with Stuvia:
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