Schedule E of Form 1040

question 30

Multiple Choice

Schedule E of Form 1040:

• A) reports the amount of tax-exempt income an individual has.
• B) reports any income from rental property.
• C) reports common expenses that businesses and farms incur.
• D) reports the gains or losses from the sale of capital assets.
• E) lists the sources of interest income and dividend income.

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Definitions:

A Credit Rating

This is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt and an implicit forecast of the likelihood of the debtor defaulting.

Note

Unsecured debt, usually with a maturity under 10 years.

Protective Covenant

A clause in a financial contract that restricts certain actions of the borrower to protect the lender's interests.

Liquidity Premium

The additional return investors demand for holding a security that is not easily convertible into cash without loss of value.