QuestionWhat type of asset is money in a retirement fund? a. investment asset b. liquid asset c. long term asset d. use asset. Select the best answer.
Studdy Solution
STEP 1
Assumptions1. We are asked to classify the type of asset a retirement fund is. . We have four options to choose from investment asset, liquid asset, long term asset, and use asset.
STEP 2
Let's define each of the asset typesa. Investment Asset An asset purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
b. Liquid Asset An asset that can be converted into cash quickly, with minimal impact to the price received in the open market.
c. Long Term Asset An asset that is not expected to be converted into cash or be consumed within one year of the date shown on a company's balance sheet.
d. Use Asset This is not a standard financial term, but in general, a use asset could be considered an asset that is used for the regular operations of a business or individual.
STEP 3
Now, let's consider a retirement fund. A retirement fund is money that is invested over a long period of time with the goal of providing income during retirement. It is not intended to be converted into cash quickly (like a liquid asset) or used for daily operations (like a use asset).
STEP 4
Given the definitions and the nature of a retirement fund, it seems that the retirement fund falls under the category of a long-term asset. It is an investment that is held for many years and is not expected to be converted into cash within a short period of time.
Therefore, the correct answer is C Long Term Asset.
Was this helpful?
