Under Which One of the Following Situations Would You Be

question 233

Multiple Choice

Under which one of the following situations would you be better off?

• A) You have $10,000 in your savings account paying 5 percent per year and unanticipated inflation is 8 percent per year.
• B) You have paid $500 for a $1,000 U.S. savings bond that matures in 10 years and unanticipated inflation is 10 percent per year.
• C) You lend a friend $1,000 at 6 percent to be repaid in one year and unanticipated inflation is 7 percent during the year.
• D) You borrowed $2,500 at 7 percent to pay for this year's college expenses and unanticipated inflation is 12 percent during the year.

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Definitions:

Letter of Credit

A financial document issued by a bank guaranteeing a buyer's payment to a seller within a specified timeframe.

International Sale

The transaction of goods or services across national borders, subject to international trade laws and regulations.

Issuer

The entity that develops, registers, and sells securities to finance its operations.

Beneficiary

A person or entity entitled to receive benefits from a trust, will, or life insurance policy.