1. The Earned Income Tax Credit (EITC) is: a. a transfer to low-income people who are unable to work. b. a flat grant that increases by $4,000 the income of all workers below the poverty level. c. a subsidy to the poor who have low earnings that increases as they earn more, reaches a maxi¬mum, and then is phased out to zero as earnings increase above a certain maximum. d. available to all persons whose incomes are below the poverty level, whether they work or not.
2. Under Temporary Assistance to Needy Families (TANF), a. federal spending is capped and is allocated to states as a block grant. b. federal spending is an open-ended entitlement program that requires federal payments to all eligible recipients who meet means and status tests. c. the states do not determine eligibility and benefit levels; instead, the federal government sets these levels as national standards. d. recipients are not required to work and will receive benefits as long as they meet a means test.
3. A stock has a beta of 1.09, the expected return on the markets is 10.3%, and the risk-free rate is 4.8%.
What must the expected return on this stock be? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places)
4. You borrow $500,000 for 10 years at 8% interest. Payments are quarterly. How long before the principal balance declines to less than $250,000?