Under What Condition Is the Fringe Benefit of a Gym

question 18

Multiple Choice

Under what condition is the fringe benefit of a gym membership taxable?

• A)When the employer has on-site facilities that are restricted to employee use.
• B)When the employer offers membership to an off-site club at no additional cost to the employee.
• C)When the employer has on-site facilities that are open to public use.
• D)Gym memberships are always taxable.

---

Definitions:

No Arbitrage

A principle stating that it is impossible to achieve risk-free profits from inconsistent or mispriced asset prices in efficient markets, as arbitrage opportunities are quickly exploited and corrected.

Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of holding a risky asset.

Risk Aversion

A person's or entity's reluctance to take risks, preferring lower returns with known risks over higher returns with unknown risks.

Total Risk

The complete range of possible risks, including both systematic and unsystematic risks, that can affect the value of an investment.