A Good Rule of Thumb Is to Limit Installment Payments

question 23

Multiple Choice

A good rule of thumb is to limit installment payments to ____________ of your net (after-tax) income.

• A) 20%
• B) 30%
• C) 40%
• D) 50%
• E) 60%

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Definitions:

Speculators

Individuals or entities that invest in markets primarily to profit from fluctuations in asset prices, rather than from the intrinsic value or income of the assets.

Face Value

The nominal value or stated value of a financial instrument or currency, as printed or inscribed on it.

Bank of the United States

A historical financial institution chartered by the U.S. Congress, pivotal in establishing the nation's early fiscal policy and bank infrastructure, with two iterations in the late 18th and early 19th centuries.

Central Banking

A financial institution designated by a government to manage the state's currency, money supply, and interest rates, as well as to oversee the commercial banking system.