Ronnie visited your office today. He is 55 years of age. He is divorced and has two

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Ronnie visited your office today. He is 55 years of age. He is divorced and has two children. One child recently graduated from college and the other child is just entering into high school. Ronnie earns $350,000 a year as the operator of a very specific type of medical equipment. There are only two of these particular machines in existence. He has provided you the following financial information.

• Cash and Cash Equivalents — $100,000

• Annual Non-Discretionary Expenses - $300,000 Which of the following is true?

a. Given all the facts and circumstances, Ronnie probably does not have an adequate emergency fund.

b. Ronnie has an emergency fund ratio of 3 months.

c. All individuals should have an emergency fund equal to 3 - 6 months.

d. Disability insurance is irrelevant in determining whether the emergency fund ratio is appropriate.

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Related Book For  book-img-for-question

Fundamentals Of Financial Planning

ISBN: 9781936602094

3rd Edition

Authors: Michael A Dalton, Joseph Gillice

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