When the Capital Retention Approach Is Used to Determine How

question 47

Multiple Choice

When the capital retention approach is used to determine how much life insurance to purchase,all of the following are subtracted from total assets to calculate the capital available to produce income EXCEPT

• A)investments in stocks and bonds.
• B)non-income producing capital such as autos and the value of the home.
• C)the amount of money needed to pay off the mortgage.
• D)auto loans and credit card debt.

Understand and correct common misconceptions about how often interest is compounded annually.

Calculate future savings based on various compounding intervals.

Understand the process and importance of reconciling a checkbook with a bank statement.

Identify the variables in financial formulas and understand their practical implications.

---

Definitions:

Longer-term Plans

Strategic objectives or projects that are intended to be achieved over an extended period of time.

Focus

The concentration of attention or energy on a specific object, task, or goal.

Time Horizon

The length of time over which an individual, group, or organization views or plans for future events.

Controlling

The managerial process of monitoring performance, comparing it with goals, and taking corrective action as needed.