Posts Tagged ‘real world graduation’

Real World Graduation, Question 45: Allocation of Blame

RealWorldGraduation_Question_45_Allocation_of_Blame   <– PDF

A wife had to go to a Garden Club meeting. She told her husband to stay home while she was out, and asked him to watch Channel 6 and get the winning lottery numbers.  Also, she did not like the friends he was likely to hang out with (especially Bob).  The husband was resentful of the way his wife had ordered him around.  While his wife was gone, the husband noticed that they were out of beer, so he decided to violate his wife’s wishes.  He left the house to go and buy some beer.  On the way, his truck ran out of gas.  So he called his friend Bob, who met him where the truck was, and brought him a few gallons of gas.  Bob went back home, and the husband continued onto the store.  As he was going into the store, a mugger tried to hold him up.  The husband refused to give the mugger his beer money, so the mugger shot and killed the husband.  Who is to blame for the death of the husband?

a) The wife, for not treating the husband with respect, which provoked him into leaving the house. If he had stayed home, he would be alive now.

b) The husband, for leaving the house when his wife specifically told him to stay home.

c) Bob is at fault because he provided the gas that enabled the husband to get to the store where he was killed.

d) The husband, because he refused to obey the mugger.

e) Everyone in the story shares some of the blame except for the wife.

(The answer is on p. 2 of the PDF.)

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Real World Graduation, Question 44: Bond Commissions

RealWorldGraduation_Question_44_Bond_Commissions   <– PDF

Suppose Christine has $1000 to invest for one year only (she will cash out after 12 months), and is only interested in conservative investments such as mutual funds based on high-quality bonds that have a guaranteed annual return. She is presented with three options: a) Bond Fund A with a guaranteed return of 3% and no sales commission; b) Bond Fund B with a guaranteed return of 6% and a sales commission of 3%; and c) Bond Fund C with a guaranteed return of 10% and a sales commission of 7%.  Assume that the risk of all three options is zero.  Sales commissions are always paid up-front.  Choose the correct statement for this one-year investment:

a) Bond Fund B is twice as good an investment as Bond Fund A (6/3 = 200%)

b) Bond Fund C is 166% better as an investment than Bond Fund B (10/6 = 166%).

c) Bond Fund C is 333% better as an investment as Bond Fund A (10/3 = 333%)

d) Bond Fund C is a better investment than splitting the $1000 between Fund A and Fund B in any ratio.

e) All of the above are true.

(The answer is shown on p. 2 of the PDF.)

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Posted in critical thinking, Economics, Real World Graduation | No Comments »

Real World Graduation, Question 43: Gold Coins

RealWorldGraduation_Question_43_Gold_Coins   <– PDF

Gold has historically been recognized as the ultimate “safe” money because it never loses its value. On the other hand, many paper currencies throughout history have eventually become worthless.  Some noteworthy examples are Continental dollar issued by Congress during the American Revolution (1777-1781), the German mark in 1923, the Yugoslav dinar in 1994, and the Zimbabwean dollar in 2008.  Many people choose to hedge against paper currencies by purchasing gold coins as a form of insurance, which could be sold or bartered in the event the paper currency ever fails.  Many types are offered for sale as follows:

a) Authentic Gauden’s $20 Double Eagles (originally issued between 1908 and 1929). A total of approximately 65,000,000 were originally minted.  It is 34 mm in diameter, and contains 42.0 milligrams (mg) of pure gold.  Each can be purchased for $ 29.95 US.

b) Tribute proof $10 Liberty Head Eagles (originally issued between 1866 and 1907). Approximately 64,000,000 total were minted.  It is 27 mm in diameter, and contains 21 mg of pure gold.  Each can be purchased for $ 19.95 US.

c) 24 carat gold clad $10 Indian Head Eagles (originally issued between 1908 and 1933). Approximately 15,000,000 total were minted. It is 27 mm in diameter, and contains 19 mg of pure gold.  Each can be purchased for $ 19.95 US.

d) Private mint authorized $5 Indian Head Half Eagles (originally issued intermittently between 1908 and 1929). Approximately 14,000,000 total were minted.  It is 21.6 mm in diameter, and contains 8.5 mg of pure gold.  Each can be purchased for $ 9.99 US.

A famous company advertises these coins for sale on TV, radio, and newspaper ads, reminding the audience that these coins are rare and out of circulation, and that gold is always highly sought after both for its intrinsic value and in the form of beautiful old coins. The ad goes on to remind the audience that gold coins should be part of every investment portfolio.  Which of these coins offers the best investment value?

a) The Double Eagle, because it is the largest physical coin and has the second-largest amount of pure gold.

b) The Liberty Head, because it contain the greatest amount of pure gold.

c) The Indian Head Eagle, because it has the lowest price and is still pure gold.

d) The Half Eagle, because it is the rarest one (fewest were minted), which makes it more valuable.

e) It is best to have a variety of these coins as an investment. The prudent investor, or person who wants some insurance against a currency collapse, would be wise to buy some of each, but not necessarily in equal amounts.  This is important to diversify one’s gold investments, even more so than stocks and bonds.

The additional information required to determine the best investment value is as follows:

  1. The current price of gold is about $120 per troy ounce.
  2. There are 31.103 grams per troy ounce, and 1000 mg per gram.

(The answer is shown on p. 2 of the PDF.)

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Real World Graduation: Question 42: Political Promises

RealWorldGraduation_Question_42_Political_Promises   <– PDF

During the Presidential election campaign of 1988, George H. W. Bush stated, “Read my lips, no new taxes”.   He was subsequently elected as the 41st President of the U. S.  What did this statement mean regarding his intended tax policy as President?

a) He would never raise income taxes if elected President.

b) Since he said “read my lips”, the statement was directed only at deaf people; so he meant that he would not raise income taxes on deaf people.

c) “No new taxes” means he would not create any new category of taxes.

d) Every tax must be paid every year, therefore all taxes are “new”; thus this statement means he was going to eliminate all federal taxes.

e) A combination of a) and c).

(The answer is on p. 2 of the PDF.)

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Posted in critical thinking, elections, government powers, Real World Graduation, U. S. Constitution | No Comments »