7
QuizMultiple Choice

Warranties

Question 7 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Of the following, which factor or factors would make it more likely that buying an extended warranty is a good idea?I. The extended warranty overlaps with the manufacturer’s warranty.II. The product has a high probability of needing repair in the next few years.III. The product is a major purchase that you are unlikely to soon replace.

Answer
A
I and III
B
II only
C
II and III
D
I, II, and III

Explanation

A warranty is more valuable when the product is likely to need a repair, so statement II supports buying one. It can also make sense for a major purchase you plan to keep, because a repair could be costly and you would benefit from continued coverage (III). Overlap with the manufacturer’s warranty does not make an extended warranty a better deal, since you may be paying for coverage you already have. Therefore, the correct choice is II and III.

AI-written and checked against the verified answer.

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