Borrowing from Another Country That Occurs When the Country Has

question 39

True/False

Borrowing from another country that occurs when the country has a trade deficit and its citizens sell real and financial assets to foreigners is called a capital inflow.

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Definitions:

Total Equity

The net value of a company, determined by subtracting total liabilities from total assets.

Degree of Financial Leverage

This metric quantifies the sensitivity of a company's earnings per share to its fluctuations in operating income, based on the structure of its capital.

Net Income

Represents a company's total earnings, reflecting the amount of revenue that remains after all operating expenses, taxes, and preferred stock dividends have been deducted.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as a periodic payment of interest on debt.