July 22, 2013
Chapter 3 – Equivalence, Loans, and Bonds
Sample Responses to Discussion Questions
1) Discuss the quantitative (economic) tradeoffs that Samuel should consider when he decides how
much money to use from his personal savings versus borrowing money from the bank.
Sample Response: There are many quantitative factors to consider. Samuel must study the
2) What qualitative (noneconomic) factors should Samuel consider when he decides how much money
to use from his personal savings versus borrowing money from the bank?
3) What types of assumptions is Samuel making when he determines his loan needs? What happens if
these assumptions do not hold?
4) How might Samuel set out to secure funding for this proposed business venture?
Sample Response: Samuel must work closely with a loan officer to secure a loan. The loan agency