If a Company Were Going to Pledge Its Capital Assets

question 92

Multiple Choice

If a company were going to pledge its capital assets to a bank as collateral for a loan, which method of valuing the assets would be more useful to the bank?

• A)Fair value
• B)Replacement cost
• C)Net book value
• D)Historical cost

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Definitions:

Ethnicity

Shared cultural practices, perspectives, and distinctions that set apart one group of people from another, based on heritage, language, religion, and social experiences.

Gini Ratio

A numerical measure of the overall dispersion of income among households, families, or individuals; found graphically by dividing the area between the diagonal line and the Lorenz curve by the entire area below the diagonal line.

Income Inequality

The uneven allocation of income among households or individuals within an economic system.

Lorenz Curve

A graphical representation of the distribution of income or wealth within a society, indicating inequality.