Lisa Begins Hanging Around with a New Group of Friends

question 87

Multiple Choice

Lisa begins hanging around with a new group of friends, most of whom do not attend school or have jobs. Instead they support themselves by selling Ecstasy and marijuana. Lisa sees that all of her new friends have lots of money to spend and decides to start selling drugs too. Which theory is Lisa reflecting with her actions?

• A)opportunity theory
• B)social control theory
• C) differential association theory
• D) strain theory

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Definitions:

Straight Debt

A fixed-income security, such as a bond, that has a predetermined interest rate, maturity, and principal repayment schedule.

Credit Default Swap

A specific type of credit derivative where the underlying reference asset is a credit obligation such as a bond or a bank loan of a specific company. One counterparty (the protection buyer) makes a periodic payment (the credit default swap premium) to the second counterparty (the protection seller). If the underlying reference asset suffers a credit event such as bankruptcy, the protection seller will make a payment to the protection buyer. Credit default swaps allow protection buyers to hedge themselves against credit risk, and protection sellers to invest based on their assessment of credit risk.

Premium Rate

This refers to the additional cost above the standard rate charged by financial instruments or insurance policies, to cover additional risks or benefits.

Warrants

Securities that grant the holder the right to purchase the issuer's stock at a specified price within a certain time frame.