If the Pure Rate of Interest Is 5 Percent Per

question 55

Multiple Choice

If the pure rate of interest is 5 percent per year,a riskless asset that guarantees to pay the owner $2,000 per year forever is worth

• A) $10,000.
• B) $20,000.
• C) $30,000.
• D) $40,000.
• E) an infinite amount.

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Definitions:

Dies Intestate

A legal term describing a situation where a person passes away without having made a valid will, thus leaving their estate to be distributed according to the laws of intestacy.

Legacy

Assets or money passed on to heirs in a will, or a system/software inherited from the past.

Uniform Probate Code

A set of laws intended to simplify the process of transferring assets upon death, and to standardize and modernize probate law across states.