All of the Following Statements About the Interest Settlement Option

question 53

Multiple Choice

All of the following statements about the interest settlement option are true EXCEPT

• A)The minimum guaranteed interest rate is usually equal to the prime rate.
• B)The interest can be paid monthly,quarterly,semiannually,or annually.
• C)The beneficiary may be allowed to withdraw part or all of the proceeds.
• D)The beneficiary may be allowed to change to another settlement option.

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Definitions:

Excess Fair Value

The amount by which the fair market value of an asset exceeds its carrying value on the balance sheet.

Franchise Contract

A legal agreement granting a person or group the rights to operate a business under the franchisor's model and brand for a specified period.

Controlling Interest

An ownership interest in an entity that gives the holder the power to direct or influence the management and policies of the entity through ownership of a majority of voting shares.

Deferred Income Tax Liability

A deferred income tax liability is a tax that is assessed or is due for the current period but has not yet been paid, pushing the obligation to future periods.