A Firm That Is a Lender Finances Its Lending

question 7

Multiple Choice

A firm that is a lender finances its lending

• A) with a default premium.
• B) with the spread between borrowing and lending rates.
• C) with retained earnings.
• D) through credit market imperfections.
• E) in the bond market.

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Definitions:

Disposable Income

The economic provision for households' saving and spending activities post income tax calculations.

Saving

Income that is not expended on immediate consumption but rather reserved for investing or future purposes.

Disposable Income

Financial resources at the disposal of households for the aims of saving and spending after income tax engagements.

Saving

The portion of income not spent on consumption or taxes, typically put aside for future use or investment.