AIG Received a Government Bailout to Save the Company Because

question 80

Multiple Choice

AIG received a government bailout to save the company because

• A) had the company gone bankrupt, too many employees would have become unemployed without sufficient unemployment insurance to aid them.
• B) had the company gone bankrupt, the effect on New York City, where it was situated, would have been a catastrophe, so the bailout was actually in part to keep New York City solvent.
• C) had the company gone bankrupt, money already owed to the U.S. government prior to the collapse would never have been recovered, so the bailout was necessary to keep AIG in operation until it was solvent enough to repay the government.
• D) had the company gone bankrupt, the U.S. financial infrastructure would have been severely or even irreparably damaged.

Understand the definitions of key financial concepts including present value, future value, discount rate, compounding, compound interest, and simple interest.

Apply the time value of money principle to real-life financial decision-making scenarios.

Explain the effects of time and rate of interest on the future value of investments.

Illustrate the relationship between present value and future value through graphical representation.

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Definitions:

Consumer Protection

Laws and practices designed to ensure the rights of consumers, as well as fair trade, competition, and accurate information in the marketplace.

Third-Party Check

A check that is written by one person or entity to another but is then given to a third party to be cashed or deposited.

Unknown Party

An individual or entity whose identity is not known or cannot be confirmed.

Written Contracts

Legally binding agreements captured in writing that specify the duties, rights, and obligations of each party.