Albert Read ElectroCorp's Ad in the Local Newspaper Advertising a Music

question 27

Multiple Choice

Albert read ElectroCorp's ad in the local newspaper advertising a music system for $89. Albert rushed to the store to buy the system only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the music system.

• A) The ad is a firm offer by the merchant, and the music system must be sold for $89.
• B) The ad is a contract and the store must abide by terms stated in the contract.
• C) The store must accept the price stated in the ad, but only if Albert has a copy of the ad with him.
• D) Albert is merely making an offer to ElectroCorp to buy the music system for $89 plus sales tax.

---

Definitions:

Prepaid Interest

Interest starts accruing (building) at the beginning of each month and continues throughout the month; prepaid interest at the closing is the amount of mortgage interest due to cover the time from the closing date to when the first mortgage payment is due.

Down Payment

The upfront money applied to a purchase that is made using a loan (credit).

Mortgage

A loan specifically used to purchase real estate, where the property itself serves as collateral until the loan is repaid.

Closing Costs

Costs that are paid at closing that include origination fees, attorney fees, points, prepaid interest, transfer tax, and title insurance.