Which of the Following Situations Is a Person Who Could

question 7

Multiple Choice

Which of the following situations is a person who could be insolvent?

• A)Assets $56,000; annual expenses $60,000
• B)Assets $68,000; net worth $22,000
• C)Liabilities $45,000; net worth $6,000
• D)Assets $60,000; liabilities $61,000
• E)Annual cash inflows$48,000; liabilities $50,000

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Definitions:

Ask Price

The lowest price a seller is willing to accept for an asset in a financial market.

Bid Price

The price at which a buyer is willing to purchase a security or commodity.

Treasury Bonds

Long-term government debt securities with a fixed interest rate and maturity of more than ten years, issued by the U.S. Treasury.

Dow Jones Industrial Average (DJIA)

An index in the stock market tracking the performance of 30 major companies traded on U.S. stock exchanges.