
Case summary:
J is a full time student work part time in a bakery. She just move into her new home and busy setting up her new home and her budget is tight. She wanted to purchase furniture for the home. So, she applied for three credit cards of different stores. She soon received those credit cards and went for shopping and purchases all the stuff that she required. She was happy with the purchase and was thinking that the bill is not going to due for another 45 days and within that time she will have money to pay stores back. Now, she starts receiving bills from store and she doesn’t have enough balance to pay the bill. Even if she pays the minimum bill it will take her around 14 years to pay the bill she doesn’t even think that furniture will last this long and now worried about it.
Character in this case: S and two bankers.
Adequate information:
Checking account: $1,800
Savings account: $7,200
Emergency fund savings account: $2,700
IRA balance: $410
Car: $2,800
Student loan balance: $10,800
Gross monthly salary from the bakery: $2,750 (Net income: $2,175)
Rent: $350
Utilities: $70
Food: $125
Gas/maintenance: $130
Credit card payment: $0
Credit card balance: $4,250 (total of three store credit cards)
To determine: The way J can use this offer to her advantage and the way in which this offer will become her major disadvantage.

Want to see the full answer?
Check out a sample textbook solution
Chapter 7 Solutions
PERSONAL FINANCE
- Finance Subject.Which of the following is a money market instrument?A) Treasury bondsB) Corporate bondsC) Commercial paperD) Common stockarrow_forwardHelp please without use of AI. no What is the main purpose of financial ratios?A) To guarantee a company's profitabilityB) To evaluate a company's financial performance and healthC) To increase a company's stock priceD) To ensure a company's debts are eliminatedarrow_forwardPlease don't use ai tool If a stock’s beta is 1.5, what does this indicate?A) The stock is less volatile than the marketB) The stock is more volatile than the marketC) The stock is not correlated with the market D) The stock is risk-freearrow_forward
- No ai What is the primary function of a financial market?A) To set interest ratesB) To facilitate the transfer of funds between savers and borrowersC) To regulate the banking industryD) To manage the government’s budgetarrow_forwardno What is the main purpose of financial ratios?A) To guarantee a company's profitabilityB) To evaluate a company's financial performance and healthC) To increase a company's stock priceD) To ensure a company's debts are eliminatedarrow_forwardplease don't use chatgpt What happens to the value of money when inflation increases?A) The value of money increasesB) The value of money decreasesC) The value of money remains unchangedD) The value of money fluctuates randomly helparrow_forward
- Do not use Ai tool What happens to the value of money when inflation increases?A) The value of money increasesB) The value of money decreasesC) The value of money remains unchangedD) The value of money fluctuates randomlyarrow_forwardNo AI tool. Which of the following best defines a bond's coupon rate?A) The market rate of interest on the bondB) The annual interest payment as a percentage of the bond's face valueC) The difference between the bond's face value and its market priceD) The total return from holding the bond to maturityarrow_forwardNo ai!! answer it A portfolio's risk can be reduced by: A) Investing in a single stock B) Diversifying investments across different asset classes C) Borrowing money to invest more D) Only investing in high-risk assets need help.arrow_forward
- No chatgpt! A portfolio's risk can be reduced by: A) Investing in a single stock B) Diversifying investments across different asset classes C) Borrowing money to invest more D) Only investing in high-risk assets need help!arrow_forwardNo chatgpt!! A portfolio's risk can be reduced by:A) Investing in a single stockB) Diversifying investments across different asset classesC) Borrowing money to invest moreD) Only investing in high-risk assetsarrow_forwardNo chatgpt!! A company’s ability to meet its short-term financial obligations is referred to as: A) ProfitabilityB) LiquidityC) SolvencyD) Efficiency solvearrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education





