A Fixed Entitlement Trust Occurs When

question 37

Multiple Choice

A fixed entitlement trust occurs when:

• A)each beneficiary is entitled to a specific equal share.
• B)a court presumes from the circumstances that a trust was intended.
• C)the trustees have the choice about how to distribute the trust income.
• D)a court rules that that it is equitable for property in trust to be returned the party who created the trust.

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Definitions:

Maturity Bond

A fixed-income security that repays the principal along with interest at the end of a specified period.

Forward Interest Rate

A future rate agreed upon for a financial transaction or investment that will be carried out at a later date.

Term Structure

The relationship between interest rates (or bond yields) and different terms (or maturities), typically depicted in a yield curve.

Expectations Theory

A theory suggesting that long-term interest rates reflect the market's expectation for future short-term rates.