Assume that you won the Lotta Dough Lotto jackpot for 20 million. Further assume that you were
offered a choice to receive the 20 million today, or receive it in equal installments of 1 million per
year for 20 years.
According to one of the principles of finance, which would you take?
A) the 20 million in equal installments of 1 million per year for 20 years because it would be
worth more than if you would receive it today
B) the 20 million today because it would be worth more than if you would receive it in equal
installments of 1 million per year for 20 years
C) You would be indifferent as to when you would receive the 20 million since the total number
of dollars received is the same either way.
D) the 20 million in equal installments of 1 million per year for 20 years because you would be
afraid of spending it all right away
Question 2
Which of the following statements about unsatisfied judgment funds is (are) true?
I. An accident victim must obtain a judgment against the motorist who caused an accident and must show the judgment cannot be collected.
II. The major disadvantage is that the negligent uninsured motorist is relieved of legal liability.
A) I only
B) II only
C) both I and II
D) neither I nor II
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