The Owner of Your Local KFC Franchise Has Had a Good

question 106

Multiple Choice

The owner of your local KFC franchise has had a good year with rising revenues and reduced operating costs that resulted in a personal income of roughly $100,000. Approximately one-third of that was taken for provincial and federal income taxes, and another third went to pay for mortgage, car payments, food, clothing, and other
Necessities. What is the remaining third called?

• A)windfall
• B)discretionary income
• C)bonus
• D)disposable income

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Definitions:

Strip Bond

A bond variant where the capital and ongoing interest payments are split and each sold as separate zero-coupon bonds.

Compounded Semi-annually

Interest that is compounded and added to the principal twice per year, emphasizing the process of growth due to reinvestment of interest.

Issue Price

The price at which a new issue of securities is offered to the public.

Strip Bond

A bond where both the principal and regular interest payments have been removed, typically sold at a discount and pays no interest until maturity.