Answer :

Final answer:

Credit involves the amount borrowed, repayment terms, and interest or fees charged. These elements are key in financial instruments like bonds, mortgages, and credit cards.

Explanation:

The word 'credit' encompasses several critical concepts in financial transactions. Primarily, these three concepts are:

  1. The amount being borrowed or the credit limit, which refers to the maximum amount of resources or funds that the lender has made available to the borrower. In cases like a credit card, this would be the maximum balance you can have outstanding.
  2. The repayment terms including the date(s) on which repayment is due. These terms outline when and how the funds should be returned to the lender, which could include periodic payments or a lump sum at a specific future date.
  3. The interest or fees charged on the borrowed amount, which represent the cost of borrowing the money or obtaining goods and services on credit. This interest compensates the lender for the risk involved and the opportunity cost of lending the money.

Credit transactions, such as issuing bonds, mortgages, and the use of credit cards, all involve these fundamental elements.

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