Shortly Before He Died, Walter Drafted a Will to Make

question 6

Multiple Choice

Shortly before he died, Walter drafted a will to make sure that the appropriate people enjoyed Bearsclaw, the name of his cabin in the mountains.At the time of Walter's death, his brother Herman was married to Stella.Stella also owned a cabin in the mountains, which she let Herman use.As Walter knew, however, Stella intended that after she died, her cabin would pass to her cousin.Walter's will therefore said that Bearsclaw would go to his sister, Maria, until Stella died.When Stella died, Bearsclaw would go to Herman.Which of the following can be said with respect to Bearsclaw after Walter died?

• A)Herman held a reversion.
• B)Stella enjoys a life estate.
• C)Maria held a remainder.
• D)Herman held a remainder.
• E)Maria held a reversion.

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Definitions:

Constant Growth Rate

The assumption that a variable, such as a company’s dividends or economy, will grow at a consistent rate over time.

Expected Dividend

The forecasted payment of dividends to shareholders, based on a company’s past dividend history and future earnings projections.

Semistrong Efficient

This term refers to a form of market efficiency that assumes all publicly available information is already reflected in stock prices, including historical and fundamental data.

Strong-Form Efficient

A state of market efficiency where all information, public and private, is accounted for in stock prices.