A Contract into Which Both Parties Enter but in Which

question 51

Multiple Choice

A contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations is known as ________.

• A) illusory promise
• B) gift promise
• C) preexisting duty
• D) illegal consideration

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Definitions:

Discount Method

A valuation technique where a future cash flow or series of cash flows is discounted back to the present to determine its worth.

Actual Interest Rate

The real rate of interest earned or paid after adjusting for compounding and fees.

Discounting

A financial strategy that adjusts the future value of cash flows to their present value, often for analysis or investment decisions.

Actual Interest Rate

The real rate of interest earned or paid on an investment or loan, taking into account the effect of compounding and all fees and charges.