Electronics and More Offers Credit Terms of 2/7, Net 30

question 79

Multiple Choice

Electronics and More offers credit terms of 2/7, net 30.What is the effective annual rate on a $4,500 purchase if you forgo the discount?

• A)41.83 percent
• B)38.59 percent
• C)44.99 percent
• D)37.80 percent
• E)32.58 percent

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Definitions:

Riskiness

The degree to which the return on an investment can vary, indicating the uncertainty and potential for loss in an investment.

Stock's Standard Deviation

A statistical measure representing the volatility or risk associated with the stock's return, showing how much the stock's returns can deviate from its average return.

Security Risk

The potential for a loss in value of an investment due to factors affecting the security itself or its issuer, such as default risk or market volatility.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs).