NISM Series X-B Practice Questions - NISM-Series-X-B Investment Adviser (Level 2) Certification Examination Exam

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A client aged 35 earns Rs. 12 lakh a year, plans to work 25 more years, and you assume a 7% discount rate. Which statement best describes how the Human Life Value would compare with simply multiplying income by years?

Discounting future income makes the HLV lower than the simple multiple Discounting makes the HLV higher than the simple multiple HLV equals income multiplied by years with no adjustment HLV ignores the number of working years

Correct Answer:

Discounting future income makes the HLV lower than the simple multiple

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