Chapter 13

Question 1

What is the grossed up amount and the credit of the dividend tax credit?

Answer 1

38% and 15.02%

Question 2

One of the ways you can lessen the tax burden on your investments is to buy tax-efficient investments that have what?

Answer 2

1. Low turnover.
2. Minimal distributions.
3. Distributions that are made as capital gains.

Question 3

CRA recommends that investors should be wary of tax shelter with the following characteristics:

Answer 3

1. The partnership doesn’t carry on any business activity.
2. There is no reasonable expectation of profit and the partnership is purely a tax ploy.
3. The business assets are overvalued.
4. The losses for tax purposes exceed the amount of riskl

Question 4

What is forecast error risk?

Answer 4

The risk that the actual inflation rate over the life of the bond is higher than the forecasted inflation rate that was embedded into the bond’s yield upon issue.

Question 5

Changes in inflations impact ….

Answer 5

Nominal bonds only.

Question 6

All else being equal, changes in real interest rates may impact …

Answer 6

RRBs the most.