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The more money that a certain investor puts in his money market account, the more interest he will receive at the end of the month. The investor allocates all of his interest at the end of the month to pay the principal on his mortgage. Hence, the investor's mortgage principal would decline if he were to sell his luxury boat and put all the proceeds in his money market account.
If the statements above are true, which of the following must be true?
If the statements above are true, which of the following must be true?
- A. If the investor were to sell his luxury boat and put the proceeds into his money market account, it would yield more interest than if he had not done so.
B. The value of the investor's boat decreased substantially since he bought it.
C. If the investor sells his luxury boat and puts all the proceeds in his money market account, then his bank will have the funds to approve more of its customers' loan requests.
D. If the investor sells his car, his mortgage principal would decline.
E. If the investor sells his boat and puts all the proceeds in his money market account, then he will be able to pay the entire principal on his mortgage.
29 Jun 2022, 03:22
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The more money that a certain investor puts in his money market account, the more interest he will receive at the end of the month. The investor allocates all of his interest at the end of the month to pay the principal on his mortgage. Hence, the investor's mortgage principal would decline if he were to sell his luxury boat and put all the proceeds in his money market account.
If the statements above are true, which of the following must be true?
If the statements above are true, which of the following must be true?
- A. If the investor were to sell his luxury boat and put the proceeds into his money market account, it would yield more interest than if he had not done so.
B. The value of the investor's boat decreased substantially since he bought it.
C. If the investor sells his luxury boat and puts all the proceeds in his money market account, then his bank will have the funds to approve more of its customers' loan requests.
D. If the investor sells his car, his mortgage principal would decline.
E. If the investor sells his boat and puts all the proceeds in his money market account, then he will be able to pay the entire principal on his mortgage.
A. If the investor were to sell his luxury boat and put the proceeds into his money market account, it would yield more interest than if he had not done so.
This is true, as the more money that the investor puts in his money market account, the more interest he will receive at the end of the month.
B. The value of the investor's boat decreased substantially since he bought it.
There has been no discussion on the value of the investor's boat.
C. If the investor sells his luxury boat and puts all the proceeds in his money market account, then his bank will have the funds to approve more of its customers' loan requests.
This is irrelevant, there is no discussion on the bank and its funds to approve its customer's loan requests.
D. If the investor sells his car, his mortgage principal would decline.
If he sells his car and puts the proceeds from it in his money market account, then yes - however this has not been discussed in the above question.
E. If the investor sells his boat and puts all the proceeds in his money market account, then he will be able to pay the entire principal on his mortgage.
We know that the more money the investor puts in his money market account the higher the interest he will receive, but we do not know whether that is sufficient to pay the entire principal on his mortgage.
Answer choice (A)
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