Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

Which of the following is considered unearned income?

1. Wages

2. Salary

3. Interest

4. Tips

The correct answer is: Interest

Unearned income refers to income that is not earned through active participation in a job or business activity. It typically includes income types that are received without the contributor actively working for them. Interest is a common example of unearned income because it is generated from investments or savings accounts without requiring the individual to be actively engaged in work or providing services. In contrast, wages and salary are forms of earned income, as they result from active work or services rendered. Tips also fall into the category of earned income, being the result of direct service provided to customers. Thus, interest stands out as it is derived from financial assets and does not require active labor, making it the correct answer.