Which of the Following Is Usually Considered a Long-Term Financial

question 33

Multiple Choice

Which of the following is usually considered a long-term financial strategy?

• A)creating a budget
• B)using savings to pay off a loan early
• C)renting an apartment to save for the purchase of a home
• D)investing in a growth mutual fund to accumulate retirement funds
• E)purchasing life insurance to cover current needs of dependents

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Definitions:

Initial Direct Costs

Expenses directly associated with obtaining or originating a financing lease, which are often deferred and amortized over the lease term.

Interest Rate Implicit

The interest rate implicit in a lease is the rate of interest that, when applied to the cash flows of the lease, causes the present value of these flows to equal the fair value of the leased asset at the inception of the lease.

Prepaid Asset

Expenses paid in advance by a company, such as insurance or rent, that are recorded as assets until they are utilized.

Unearned Interest: Leases

Interest that has been collected on a lease but not yet earned, often related to the financing element of leases.