Donald and Charlene Are Married and Do Not Have Any

question 26

Multiple Choice

Donald and Charlene are married and do not have any children.Each plans to continue to work after the other one dies.Which method are they using to determine their life insurance needs?

• A) Easy method
• B) Dual income, no kids method
• C) Formal calculation method
• D) Nonworking spouse method
• E) Family needs method

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Definitions:

Maximum Growth Rate

The highest possible rate at which a company can expand its operations using only internal financing sources, without resorting to borrowing or issuing new equity.

Debt-equity Ratio

A metric that measures a company's financial leverage, calculated by dividing a company’s total liabilities by its shareholder equity.

Retention Ratio

The proportion of net income that is retained by a company rather than distributed to shareholders as dividends.

Sustainable Growth Rate

The maximum growth rate a firm can achieve without having to finance growth with additional equity or debt.