Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Anthony has a Visa card with a $33,500 limit, a MasterCard with a $22,000 limit, a Chase Card with a limit of $17,000 and a Discover card with a $37,500 limit.
Anthony has accumulated the following balances on his credit cards:
Visa card: $19,299,
MasterCard: $19,952
Chase card: $2,000
Discover card: $3,886
What is Anthony’s debt-to-credit ratio?
Expert Solution
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Step 1: Meaning and formula of debt-to-credit ratio
Debt-to-credit ratio is also known as Credit Utilization rate.
It represents how much debt you have used out of total credit available.
Debt-to-credit ratio= (Total debt / Total Credit available) x 100
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