Which of the Following Statements Is True

question 21

Multiple Choice

Which of the following statements is true?

• A)Interest rates charged to well-known corporations are higher than rates charged to individuals because corporations can afford it.
• B)If people expect higher rates of inflation, the market interest rate will decrease because fewer people will borrow.
• C)Interest rates in unstable countries are lower than rates in stable countries.
• D)The risk cost of doing business in a high-crime area is greater and the cost of borrowing is, therefore, greater there.
• E)The lower the tax rate, the greater the cost of borrowing.

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Definitions:

Retained Earnings

Profits that a company keeps after dividends are paid, which can be used for reinvestment in the business or to pay down debt.

Liabilities

Financial obligations or debts a company owes to external parties.

Cash

Liquid assets held by an entity that can be immediately used for transactions.

Ex-dividend Date

The specific date on which shares of a company stop coming with the right to receive the most recently declared dividend, usually set two trading days before the record date.