Question

The interest paid on which type of loan is not tax deductible?

Multiple Choice

• Home equity loan interest for home improvements

• Credit card interest

• Mortgage interest to buy a home

• Mortgage interest to build a home

• Investment interest up to the amount of investment income

oan Martin expects interest rates to decline over the next few months. To achieve her long-term financial goals, she will trade off liquidity for a higher return by using a:

Multiple Choice

• regular savings account.

• interest-bearing checking account.

• five-year certificate of deposit.

• money market account.

• money market fund.

A certificate of deposit usually has:

Multiple Choice

• earnings based on fluctuating market interest rates.

• no set time period.

• a penalty for early withdrawal of funds.

• a variable rate of return.

• no minimum deposit amount.

Answer 1

1st question.

B. credit card interest.

credit card interest is not tax deductible.

Rest of the given options are interest deductible.

2nd question.

C.five year certificate of deposit.

certificate of deposit is not liquid, there will be early withdrawal penalty

remaining options are more liquid than certificate of deposit and offer less interest.

3rd question:

C.a penalty for early withdrawal of funds.

It has fixed time period, fixed interest rate and also has minimum deposit amount.