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potential outcome should something happen. The text describes that the type of events described as “pure risk” are often insurable. To offset these risks, a business can purchase insurance or just go ahead and assume the risk. Risk assumption is when a company is aware of all potential outcomes put proceeds with the plan despite potential negative outcomes. A firm may also seek out a third party for a risk transfer. An example of a risk transfer is if a mechanic agrees to do work on a vehicle and has a promise to pay from the auto insurance company rather than doing the work and running the risk that the vehicle’s owner doesn’t make payment as expected. What is the difference between a contribution and a benefit-oriented retirement plan?A contribution oriented plan provides benefits to the retiree based on the account balance that has been accumulated during the working life of the pensioner. This type of plan only gives theretiree what they’ve put into it. A benefit-oriented plan varies from this because if assures the retirees that they’ll receive a percentage of the compensation paid to the employee during the last several years of employment and the total term of the employment (Adelman, 2009). The text cites military retirement as an example of this. The military offers a percentage once you’ve reached 20 years in service and will be paid based on the salary of your highest rank
earned, so long as you held that rank for at least three years. What is the difference between a mutual fund and a mutual fund family?A mutual fund is a collects funds from multiple investors and uses all of the money to purchasestocks and bonds. A mutual fund family is an investment group that compiles mutual fund portfolios (Adelman, 2009).How may a small-business owner plan for the use, conservation, and transfer of wealth asefficiently as possible?To plan for an efficient transfer of wealth without disruption of business operations, a business owner should take time and consideration in building their succession plan. An estate plan serves “as a tool that allows the business to continue as a separate entity” after the owner’s passing. An estate plan must contain a will, living will, and advanced directives. It is importantthe the business owner understands that the type of business he has will determine what