A deposit Tracker Bond with 100% capital guarantee and a 10% maturity bonus on €100,000 yields what amount of DIRT on a €100,000 investment (assuming no exemptions)?

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Prepare for the Qualified Financial Adviser Exam 2 with flashcards and multiple choice questions, complete with hints and explanations. Get exam-ready and increase your confidence with our comprehensive study materials!

Multiple Choice

A deposit Tracker Bond with 100% capital guarantee and a 10% maturity bonus on €100,000 yields what amount of DIRT on a €100,000 investment (assuming no exemptions)?

Explanation:
DIRT is the tax withheld on interest income from deposits. The Tracker Bond pays a 10% maturity bonus on €100,000, which is €10,000 of interest. With no exemptions, the DIRT rate is 33%, so DIRT on €10,000 is €3,300. Thus, the DIRT amount is €3,300. (For context, the gross maturity value is €110,000, of which €3,300 is withheld as DIRT, leaving €106,700 received.)

DIRT is the tax withheld on interest income from deposits. The Tracker Bond pays a 10% maturity bonus on €100,000, which is €10,000 of interest. With no exemptions, the DIRT rate is 33%, so DIRT on €10,000 is €3,300. Thus, the DIRT amount is €3,300. (For context, the gross maturity value is €110,000, of which €3,300 is withheld as DIRT, leaving €106,700 received.)

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