John Is Thinking About Preparing a Durable Power of Attorney

question 19

Multiple Choice

John is thinking about preparing a durable power of attorney. This indicates that he wants to

• A) ensure that a single lawyer will be able to handle all of his legal needs.
• B) declare that his current will is invalid.
• C) eliminate the taxes on his estate when he dies.
• D) appoint someone to take over his finances if he should become incapacitated.

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Definitions:

Reinvestment Rate Risk

The risk that future cash flows from an investment will have to be reinvested at a potentially lower interest rate, impacting the investment's overall returns.

Annual Coupon

The yearly interest payment paid to bondholders, based on the bond's face value.

Yield to Maturity

This refers to the total return anticipated on a bond if the bond is held until its maturity date.

Call Provision

A call provision is a term in the bond agreement that allows the issuer to repurchase and retire its bonds before the maturity date, typically at a premium.