Sometimes It May Be Better to Use Savings Rather Than

question 57

Multiple Choice

Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when

• A) the borrower has adequate savings.
• B) interest rates are rising.
• C) interest rates are falling.
• D) the cost of borrowing is greater than the interest earned on the savings.
• E) interest earned on savings is greater than the interest paid on the loan.

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Definitions:

Risk of Loss

The potential that an investment's value may decrease or that a business may suffer losses.

Transit

The movement of people or goods from one location to another, which can involve multiple modes of transportation such as buses, trains, and ships.

Conditional Sales Contract

A sales agreement that grants possession of an asset to the buyer, but withholds legal ownership until all terms have been fulfilled, typically payment in full.

Sale Itself

An actual transaction or agreement where a seller agrees to transfer ownership of goods or property to a buyer for a price.