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:

Net Sales

The total revenue a company generates from sales after subtracting returns, allowances, and discounts.

Increase in Accounts Receivable

A situation where the amount of money owed by customers to a company grows due to sales on credit outpacing payments received.

Credit Sales

Sales made by a business where the payment is to be received at a later date, extending credit to customers.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services that have been delivered but not yet paid for.