What Is The Prime Reason That Jenny's Discretionary (2024)

FAQs

What Is The Prime Reason That Jenny's Discretionary? ›

What is the prime reason that Jenny's discretionary income is more volatile than her salary? Answer : Her mortgage payments and necessities are fixed.

Her cost of living is affected by high inflation in the neighborhood. Discretionary income is the remaining amount after deducting taxes, mandatory contributions, and other necessary costs including mortgage. Taxes and mortgage payments normally have fixed rates which will not change the discretionary income.

How is the scenario of Jenny's changing discretionary income with her changing salary analogous to the nature of equities? A) It shows how the value of equities can fluctuate with changes in a company's profitability.

Expert-Verified Answer

is equal to the change in salary because the fixed costs remain constant. Therefore, as Jenny's salary increases, her discretionary income increases by the same amount, assuming that the fixed costs do not change.

Discretionary income is the amount of an individual's income that is left for spending, investing, or saving after paying taxes and paying for personal necessities, such as food, shelter, and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services.

Discretionary income is the amount left from a person's earnings after paying taxes and paying for personal needs such as food and shelter.

The Pay As You Earn Plan is a repayment plan with monthly payments that are generally equal to 10% of your discretionary income, divided by 12, but never more than the 10-year Standard Repayment amount.

When individuals and households spend more of their discretionary income on goods and services, vacations, luxury items, and other nonessential items, money is funneled towards businesses that provide those goods and services.

Discretionary income is equal to disposable income minus all payments for necessities, including a mortgage or rent payment, health insurance, food, and transportation. This portion of disposable income can be spent at will.

What is the primary reason for US gov bonds to ripple through the bond market? Government bonds form a large portion of investor holdings, and corporate bonds are often priced relative to gov bonds.

What is the significance of the financial leverage Jenny benefited from in her house purchase? ›

Answer. Financial leverage increased Jenny's potential return on investment by allowing her to purchase a house with borrowed funds, which could amplify profits if the property appreciates in value.

Final answer: The main reason one discounts future cash flows in the absolute valuation process is due to the fact that investors prefer cash flows today to cash flows in the future, based on the potential earning capacity of the current money. In other words, this is due to the time value of money.

It expresses that the manager believes the company will have favorable returns after the IPO. So, the best answer is c. An IPO reveals the value of the manager owners stake.