Many Financial Experts Advise That You Set Up a Contingency

question 122

Multiple Choice

Many financial experts advise that you set up a contingency fund equal to about ________ of your earnings and keep these funds in highly liquid accounts.

• A) two months
• B) six months
• C) one year
• D) three years

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Definitions:

Contribution Margin

The amount by which the sale of a product or service exceeds its variable costs, used to cover fixed costs and generate profit.

Incremental Annual Net Cash Inflows

The additional cash flow a company receives from undertaking a project, after accounting for direct costs and revenue changes.

Donut Maker

A kitchen appliance used specifically for making donuts.

Simple Rate

A basic, uncomplicated rate often used in calculations that do not require detailed financial complexity.