When You Die,this Tax Will Be Based on the Fair

question 59

Multiple Choice

When you die,this tax will be based on the fair market value of your investments,property,and bank accounts less an exemption (of $5.12 million in 2012) .

• A) Estate tax
• B) Gift tax
• C) Inheritance tax
• D) Trust federal income tax
• E) Will tax

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Definitions:

Cost of Capital

The minimum expected return necessary to attract investors to provide capital for a project or investment.

Certainty Equivalent Approach

A method used to evaluate investment opportunities under conditions of uncertainty, adjusting future cash flows to present value as if they were certain.

Forecast Cash Flow

The estimation of the amount of money expected to be received and paid out over a future period.

Risk Adjusted Rate

A rate of return that has been modified to take into account the risk of the investment, offering a way to compare the attractiveness of various investments.