(show all workings 60marks)
This question relates to material covered in Topics 1-5.This question addresses the 1st, 2nd and 3rd subject learningoutcomes.
(a) Bradley hates taking risk with his money; \"I hate shares andproperty, I know a lot of people who have lost money in thoseinvestments\". As a result he will only consider bank guaranteedinvestments. Bank guaranteed investments are returning 1%. Bradleyhas a marginal tax rate of 32.5% and pays medicare levy of 2%.
- Assuming he pays tax at 32.5% plus medicare levy, on the incomefrom his investment, is he preserving the real dollar value of hisinvestment if inflation is 2.5% per annum? Show your workings tojustify your answer. (2.5 marks)
- When considering your calculations, how would you explain thebenefits of risk to Bradley? (2.5 marks)
