Question

1) Dividend is the rent charged for the use of money. Select one: True False

2) Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years. Assuming Betty can earn 10 percent over this period, how much must she deposit at the end of each year? Select one: a. $17,460 b. $22,000 c. $18,560 d. $14,760

3) Total income includes all of the following except Select one: a. interest or dividends received. b. salary or wages. c. capital gains realized. d. inheritances.

4) If you were to receive $100 000 from a corporation, the most tax-efficient way to receive it would be as Select one: a. interest. b. dividends. c. salary. d. capital gains.

5) If both a husband and a wife are employed full time, their consumption behaviour Select one: a. is usually higher. b. is unlikely to be affected. c. will decrease as they age. d. tends to decrease.

6) What is a good way to determine the accuracy of your budget?

Select one:

a. Be more cautious and increase your expenses estimates.

b. Be more cautious and reduce your income estimates.

c. Review your forecast carefully and project it into the future.

d. Compare your actual inflows and outflows for a recent period to your forecast.

7) What do many individuals tend to do with their cash outflows?

Select one:

a. Balance them

b. Maximize them

c. Overestimate them

d. Underestimate them

8) How long will it take Ivy's money to triple in value at 12 percent compounded quarterly?

Select one:

a. 9.2 years

b. 9.3 years

c. 9.7 years

d. It depends on the amount

9) Individuals who switch from a low-demand industry to a high-demand industry usually earn higher incomes.

Select one:

True

False

10) Getting financial help from family and friends is easy and should be one of your first options in case of emergencies.

Select one:

True

False

Answer 1

1) False. Dividend is not a rent, rather it is a reward paid to equirt holder for the risk they have taken. It is important to know that rent is paid, irrespective of gain or loss. However, dividend can be omitted if company runs into losses. So, dividend is not a rent

2)

We are given,

Future Value = 1,000,000

Rate of interest, r = 10%

Time Period = 20

Substituiting the values

Hence, the correction option is a. $17,460.

3) Salary, dividend, interest and capital gain are income. They are to be reported as income in tax return. However, inheritances are not considered while calculating tax return and hence, they cannot be classified as income.

Therefore, correct option is d, inheritences.

4)

a. Interest is exempted for some amount. However, it is not fully exempt and only some part is exempted.

b. Dividends are full exempted from tax. As they are already taxed under corporate tax, therefore, dividends are not taxable in the hands of received.

c. Salary is fully chargeable to tax.

d. Capital gains are chargeable to tax.

Hence the correct option is b. Dividends.

5)

If both husband and wifes are employed full time, they will earn more money and subsequently, their ability to spend will increase. If their ability to spend increase, their consumption increase. So, there consuption behaviour will increase.

Hence, the correct option is a. Usually higher

6)

a. Be more cautious and increase expenses. If you were cautious, you would decrease your expenses. It is not a right option.

b. Be more cautions and decrease income. Why would someone want to decrease their income? It is not a right option.

c. Review your forecast and project it in future. It is a good strategy, However just reviewing the forecast wont get you result. You also need to check your present cash flows and compare it to future forecast.

d. Compare you cash inflows and outflows for recent period to future. This is right option. You compare your recent cash flow and then make your future predictions and find future forecast.

So, the correct option is d.

7)

Cash outflows are the expenses that individual incur in their day to day lifestyle. It is human psychology that you always want spend more. Therefore, individual tends to maximize their cash flows.

So, the correct option is b. Maximize them.

8)

Let us assume total amount deposited be 1
Present Value(PV)	1
Future Value(FV)(1*3)	3
Interest Rate compounded quarterly(12%/4)	0.03
We know that FV = PV(1+r)t, where r =rate, t = time period
So, substituting the values we get
3 = 1*(1+0.03)t
From log theorem
t = log1.033
t = 37.16 quarters
We shall convert quater in years by divindng it by 4
No. Of years (37.16/4)	9.29

Hence 9.29 years or 9.3 years shall be required to convert the initial amount to 3 times when quarterly compounding rate is 12%

Therefore, correct option is b. 9.3 years.

If you have any doubt, ask me in the comment section.

PS: You can ask the rest of the question again, will be happy to help.