SIE Exam Question 909: Answer and Explanation

Question: 909

John owns an investment yielding an after-tax return of 9.5%. If he is in the 15% tax bracket, what is the equivalent pre-tax return?

• A. 1.43%
• B. 8.08%
• C. 10.93%
• D. 11.18%

Correct Answer: D

Explanation:

Pre-tax return = 0.095 ÷ (1 - 0.15) = 0.1118 = 11.18%