Assume You Purchase an Asset That Cost 6000 and Borrow

question 2

Multiple Choice

Assume you purchase an asset that cost 6000 and borrow 40 % of the cost from a wealthy relative. After a year the asset is worth 7800 . What is your rate of return on your investment?

• A)50%
• B)30%
• C)7.5%
• D)60%
• E)5%

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Definitions:

Repossess

The act of taking back ownership of property, typically by a lender or seller, from the borrower or buyer due to failure to meet repayment terms.

Financing Statement

A financing statement is a document filed by a creditor to indicate a security interest in the assets of a debtor, typically used in relation to secured transactions.

Purchase Money Security Interest

A legal claim that allows a lender to repossess or foreclose on property if the borrower fails to repay a loan used to purchase the property.

Bankruptcy

A legal process that allows individuals or entities unable to meet their financial obligations the opportunity to discharge or reorganize their debts.