Rashid's Monthly Expenses Are $4000 and He Expects That His

question 64

Multiple Choice

Rashid's monthly expenses are $4000 and he expects that his cash flow will always be sufficient to cover his expenses.How much should he ideally have in his emergency fund?

• A)$12 000 using a combination of liquid investments and access to credit
• B)$24 000 because it is always best to be safe
• C)None,but he needs a $24 000 limit on his credit card.
• D)$12,000 invested in two- to three-year GICs to earn a higher return

---

Definitions:

Flood Control System

A flood control system consists of structures and measures implemented to manage and regulate water flow to prevent or mitigate the effects of flooding in vulnerable areas.

Insurer

An entity which provides insurance is responsible for compensating its clients against losses from certain specified risks.

Principal-Agent Problem

A dilemma in economics where one party (the agent) is able to make decisions that impact another party (the principal), potentially leading to conflicts of interest.

Ownership

The act, state, or right of possessing something.