<u>4. Option (B) is correct. The overall credit utilization is 46%.
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<u>5. Option (C) is correct. The total liability of Jerry is $500. </u>
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Further Explanation:
Credit utilization rate:
Card utilization rate refers to the portion of the credit card limit that has been used by the credit cardholder. When the credit card holder uses the funds, the used or withdrawal funds is known as the credit card balance.
Calculate the overall credit utilization:
The card balance refers to the amount utilized from the credit card. Therefore, the overall credit utilization can be calculated by dividing the overall credit card balance with the total credit card limit.
\begin{aligned}\text{Overall credit utilization}&=\frac{\text{Overall balance}}{\text{Total credit card limit}}\\&= \frac{\$410+\$510}{\$1,000+\$1,000}\\&=0.46\:or\:46\% \end{aligned}
Thus, overall credit utilization is 46%.
Determine Jerry’s liability:
Jerry is liable for the payment of the whole $500. The credit card is stolen, and the amount is withdrawn because of Jerry’s mistake. There was no mistake from the side of the bank. Therefore, Jerry has to pay the whole amount.
Thus, option (c) is correct. The total liability of Jerry is $500.
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Answer Details:
Grade: High School
Subject: Business Studies
Chapter: Money & Banking
Keywords: Suppose, credit, cards, the, first, has, a balance, $410, and, credit, limit, second, balance, $510, credit limit, credit utilization.