A Fixed Cost

question 44

Multiple Choice

A fixed cost:

• A)goes up in total when activity increases.
• B)goes up per unit when activity increases.
• C)goes down in total when activity increases.
• D)goes down per unit when activity increases.

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Definitions:

Default

Failure to fulfill an obligation, especially failure to meet a financial commitment or appear in a court of law.

Prepayment Penalty Clause

A provision in a contract that imposes a penalty on a borrower for paying off a loan before its maturity date.

Mortgage Loan

A mortgage is a loan that is secured by tangible real estate property, evidenced through a mortgage note that demonstrates both the loan's existence and the property's lien.

Penalty

A sum inserted into a contract not as a measure of compensation for its breach but rather as punishment for a default. The agreement as to the amount will not be enforced, and recovery will be limited to actual damages.