What Credit Decision Is Appropriate for a Potential Customer That

question 14

Multiple Choice

What credit decision is appropriate for a potential customer that offers an 80% chance of paying on a $10,000 sale that has an 80% cost?

• A) Grant credit since the expected profit is $3,200.
• B) Grant credit since the expected profit is $800.
• C) Refuse credit since the expected profit is zero.
• D)Refuse credit since the expected loss is $3,000.

Distinguish between different financial instruments and their roles in the economy.

Assess the implications of government budget deficits and surpluses on long-run economic growth and interest rates.

Understand the factors affecting bond interest rates and risks.

Identify examples of investments in various contexts.

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Definitions:

Purchase Process

The series of steps that a customer goes through when deciding to buy a product or service, from recognizing a need to post-purchase evaluation.

Memory

The ability to store, retain, and subsequently retrieve information.

Internal Locus

Internal Locus refers to a belief that individuals control their own destiny and outcomes are a result of their actions rather than external factors.

External Locus

A belief system or psychological orientation that attributes success or failure to external factors beyond one's control.