Suppose That an Individual Receives an Unexpected, One-Time Windfall of

question 32

Multiple Choice

Suppose that an individual receives an unexpected, one-time windfall of
$1,000. To determine its effect on future consumption,

• A) preferences about the desirability of both steady consumption and the desired size of the bequest are required.
• B) it would be necessary to know the desired size of the bequest, but the desirability of steady consumption is immaterial.
• C) it would be necessary to know the value ascribed to steady consumption, but the desired size of the bequest is immaterial.
• D) neither the desirability of steady consumption nor the desired size of the bequest is material because $1,000 is too small a sum to be affected by either.
• E) none of the above.

---

Definitions:

Cash Payments

Monetary transactions in which money is paid out by a business to settle obligations, including expenses, debts, or purchase of assets.

Horizontal Analysis

A financial analysis technique that compares historical financial information over a series of reporting periods to identify trends and growth patterns.

Regional Segments

Divisions within a company that are organized based on geographical areas, allowing for targeted strategies and reporting that address specific regional market conditions.

Percentages

A mathematical concept used to express proportions, ratios, or fractions in terms of 100, representing parts of a whole.