Credit Has Its Advantages and Disadvantages

question 84

Multiple Choice

Credit has its advantages and disadvantages. Which of the following is false?

• A) Credit cards should be used with discipline.
• B) You should spend up to the limit on all your credit cards.
• C) Cash advances are available through a credit card.
• D) Bankruptcy is the worst-case scenario from poor credit management.

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Definitions:

Simulation Analysis

A method used in risk management that uses statistical models to predict the outcome of a decision under conditions of uncertainty.

Degree Of Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume, indicating financial risk.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the present value of all future cash flows minus the initial investment cost.

Simulation Analysis

is a method used in risk management to model possible outcomes of a decision by manipulating variables within mathematical or computer simulations.