Question

Antonio tries to limit his risk of overexposure to debt by using a ________________ to store a certain amount of value that he then uses to make purchases.
A. debit card
B. credit card
C. smart card
D. chip card

Answer 1

Answer:

Antonio tries to limit his risk of overexposure to debt by using a smart card to store a certain amount of value that he then uses to make purchases.

Explanation:

Debt is a legally binding condition in which one party to owes another money to the other party. It could be due to borrowed funds or an unpaid sum of money. Debt exposure can be explained as the level of debt by which the borrower owes the lender. Overexposure to debt is the condition in which a borrower is at high risk of defaulting. Overexposure conditions can be detrimental to an individual's access to credit, and thus should be avoided at all cost. The use of a smart card can be of use in such cases to avoid overexposure to debt.

A smart card is a physical card embedded with a micro-chip that contains credit tokens and information. The smart card is rectangular shaped and usually made of plastic, they are small enough to be carried with ease in a wallet. The information in the microchip is usually encrypted to ensure security of the information in the microchip. A user can store budgeted amounts of credit in the smart card, in this way he/she can decide to use this token to purchase goods and services without exceeding the limit. Once the limit is reached, one can no longer make any more purchases thus limiting overexposure to debt.