Question

Elijah has an opportunity to study abroad, but this will cost $5000 more than his regular college tuition.He wants to have a career in international finance when he graduates, so this opportunity will beparticularly valuable for his career. His parents encourage him to go and tell him that they will help payback the loan next year when they are done paying his brother’s college tuition. What kind of loanshould Elijah get?
(1 point)
a loan with a very high APR
a government bond or treasury bill
a secured loan since the trip is collateral
an unsecured loan since there is no collateral

Elijah has an opportunity to study abroad, but this will cost $5000 more than his regular college tuition.He wants to have a career in international finance when he graduates, so this opportunity will beparticularly valuable for his career. His parents encourage him to go and tell him that they will help payback the loan next year when they are done paying his brother’s college tuition. Is this a good use ofcredit?
(1 point)
No, he cannot be sure of the terms of the loan.
No, students should never go into debt for education.
Yes, it will benefit him and his parents pay some of it.
Yes, borrowing is always fine if it is related to educati

Answer 1

Q1: an unsecured loan since there is no collateral.

Q2: Yes, it will benefit him and his parents pay some of it.
Rationale: The trip has clear career value (potentially higher future earnings) and parental support reduces repayment risk, so borrowing for this investment in human capital can be justified.