Instruction 8.1: For the Following Problem(s), Consider These Debt Strategies Being Considered

question 5

Multiple Choice

Instruction 8.1:
For the following problem(s) , consider these debt strategies being considered by a corporate borrower. Each is intended to provide $1,000,000 in financing for a three-year period.
• Strategy #1: Borrow $1,000,000 for three years at a fixed rate of interest of 7%.
• Strategy #2: Borrow $1,000,000 for three years at a floating rate of LIBOR + 2%, to be reset annually. The current LIBOR rate is 3.50%
• Strategy #3: Borrow $1,000,000 for one year at a fixed rate, and then renew the credit annually. The current one-year rate is 5%.
-Refer to Instruction 8.1. After the fact, under which set of circumstances would you prefer strategy #2? (Assume your firm is borrowing money.)

• A) Your credit rating stayed the same and interest rates went up.
• B) Your credit rating stayed the same and interest rates went down.
• C) Your credit rating improved and interest rates went down.
• D) Not enough information to make a judgment.

Appreciate the significance of truthfulness in advertising and the requirement for ad substantiation.

Know the legal distinctions between puffery and deceptive advertising.

Understand the international aspects and variations in consumer protection laws.

Recognize the rights of consumers under specific acts like the Equal Credit Opportunity Act and the Truth in Lending Act.

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Definitions:

Action Required

A task or response that must be undertaken to address a specific situation or to achieve an outcome.

Patient Relocation

The process of transferring a patient from one location to another for medical care or treatment.

Collection Agency

A business that pursues payments on debts owed by individuals or businesses.