When Considering How Much Debt to Incur in Student Loans

question 7

Multiple Choice

When considering how much debt to incur in student loans, you learn that it is wise to keep your student loan payment to 10% or less of your starting monthly income. Suppose you anticipate a starting annual salary of $48,000. Set up and solve an inequality that represents the amount of monthly debt for student loans that would be considered manageable.

• A) The amount of monthly debt for student loans is $400 or more.
• B) The amount of monthly debt for student loans is $390.
• C) The amount of monthly debt for student loans is $390 or less.
• D) The amount of monthly debt for student loans is $400 or less.
• E) The amount of monthly debt for student loans is $390 or more.

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Definitions:

Stock Price

The current market price at which a share of a company's stock can be bought or sold.

Exercise Price

The cost at which an option's owner is allowed to purchase (for a call option) or offload (for a put option) the underlying asset or commodity.

Time Value

The additional amount that investors are willing to pay for an asset, based on the potential for it to increase in value over time.

At-The-Money

A financial term describing an option whose strike price is identical to the current price of the underlying asset.