Financial Concepts

Financial Concepts

1. The condominium - expected annual increase in market value = 5%.

ATY 2000x 0.72 = $1440 (2000 is the increase in value and since the tax rate is 28% we multiply the amount by (1-0.28)= 0.72. } This is to ascertain the after tax yield for Bernie and Pam.

This is the after tax yield if Bernie and Pam Britten go in for a condominium.

2. Municipal bonds - expected annual yield = 5%. ATY 2000 x 0.72 = $1440

This is the after tax yield if they go in for the Municipal bonds.

3. High-yield corporate stocks - expected dividend yield = 8%.

ATY 3200 x 0.85 = $2720 This is the after tax yield if they go in for high-yield corporate bonds.

4. Savings account in a commercial bank-expected annual yield = 3%.

ATY 1200x 0.72 = $846. This is the after tax yield if they go in for a savings account

in a commercial bank.

5. High-growth common stocks - expected