Mary Received an Unsolicited Selection of CDs in the Mail

question 34

Essay

Mary received an unsolicited selection of CDs in the mail with a letter informing her that she was now a member of the CD of the Month Club. It also said that if she didn't want these CDs, she could simply send them back. Otherwise, she would be billed $10 for each CD at the end of the month. She simply put them away, and did not respond. They continued to send her more CDs each month until she had received 100 of them over a period of 10 months. The club then sent her a letter demanding payment or they would take legal action. Explain her legal obligation in these circumstances.

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Definitions:

EAR

stands for Effective Annual Rate, a calculation that reflects the annual interest on an investment or loan, taking into account the effect of compounding interest.

APR

Annual Percentage Rate, which represents the annualized cost of credit including interest and other charges, helping consumers compare the cost of loans.

Continuous Compounding

Continuous compounding refers to the process of calculating interest on an investment, where the interest amount is reinvested and earns additional interest continuously, leading to exponential growth.

Sharpe Ratio

A metric used to assess the risk-adjusted return of an investment portfolio.