What type of asset is Joseph’s diamond necklace collection considered to be?

Joseph, a retired jeweler, meets with Larry, an insurance agent with Summit Life Co., to review Joseph’s life insurance needs. Joseph has made it clear in his will that upon his death, his son will inherit his collection of diamond necklaces, valued at $1.8 million.

What type of asset is Joseph’s diamond necklace collection considered to be?
A . Liquid asset.
B . Investment asset.
C . Fixed asset.
D . Pension asset.

View Answer

Answer: B

Explanation:

Joseph’s diamond necklace collection is classified as an investment asset due to its value and potential for appreciation over time. Investment assets are non-liquid assets that hold value, often with the potential to increase, and are usually part of an estate for wealth preservation or transfer. Liquid assets are easily convertible to cash, which does not apply here. Fixed assets typically refer to property or equipment used for business purposes. Thus, Option B accurately describes the nature of his jewelry collection.