Mortgage payments and student loans are examples of…
a
assets
b
credit
c
collateral
d
income
b (credit)
b) credit
The correct answer is b) credit.
To arrive at this answer, we need to understand the definitions of these terms:
a) Assets: Assets are something valuable that an individual or organization owns, and which can be used to generate income or provide financial security.
b) Credit: Credit refers to the ability of a borrower to obtain goods or services before making payment, based on the trust that payment will be made in the future. It also refers to the money borrowed from a lender, which needs to be paid back with interest.
c) Collateral: Collateral is an asset that a borrower pledges to a lender as security for a loan. If the borrower fails to repay the loan, the lender has the right to seize the collateral to recover the amount owed.
d) Income: Income refers to the money an individual earns through employment, investments, or other sources.
In this case, mortgage payments and student loans represent credit because they involve borrowing money from a lender (typically a bank or financial institution) to finance the purchase of a home or to cover educational expenses. Both of these require the borrower to repay the borrowed amount (the principal) plus interest over a specific period of time.