Which of the Following Is a Valid Reason for Using

question 124

Multiple Choice

Which of the following is a valid reason for using credit?

• A) Purchasing a car so a homemaker can return to work
• B) Borrowing for a college education
• C) Purchasing an item that costs less now than it will later
• D) Paying for a medical emergency
• E) All of these are valid reasons for borrowing

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Definitions:

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specified time frame.

Fair Hedge

A financial strategy used to reduce risk by taking offsetting positions in a security and its derivative, ensuring gains in one offset losses in the other.

British Pounds

The currency of the United Kingdom, also known as GBP (Great British Pound).

Foreign Exchange Gain

A profit derived from the change in exchange rates when converting from one currency to another.