Question

Karl purchased a second, larger home in which to live. He has

decided to rent his first home out for $1,500 a month. His
mortgage on the first home is $1,250. Is this an example of
passive income?
A) No B) Yes

Answer 1

yes

Step-by-step explanation:

Passive income is any earning that does not require a person to get involved too much. It is income that requires little effort to earn and maintain. Examples of passive income include shareholder's dividends and rental income. Passive income contrasts with active income, where one participates, is fully engaged, or works for many hours.

Karl receives $1500 as rent and pays $1250 as a mortgage. He earns $250 without using too much effort.