Which has least price sensitivity to interest rate change

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Reference no: EM131940704

You put $5,000 of your salary into a tax-advantaged account. In which account would the money be taxed now at your current income tax bracket (i.e., you put in “after-tax” dollars)? a) Roth IRA b) Traditional IRA c) Company 401k pension plan d) 529 Plan

1. Which has the least price sensitivity to an interest (discount) rate change? All have the same face value.

a) a ten-year note with a 5% coupon

b) a ten-year note with a 7% coupon

c) a five-year with a 5% coupon

d) a twenty-year floating rate note

2. How are a Roth IRA and a Traditional IRA similar?

a) Both are intended for employees of companies.

b) Both are intended for self-employed people.

c) Savings that are put into each of these IRAs are never taxed.

d) Whichever is chosen will be an asset on the individual’s balance sheet.

Reference no: EM131940704

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