The Amount by Which the Required Discount Rate Exceeds the Risk-Free

question 73

Multiple Choice

The amount by which the required discount rate exceeds the risk-free rate is called

• A) the opportunity cost.
• B) the risk equivalent.
• C) the risk premium.
• D) the excess risk.

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Definitions:

LIFO

An inventory valuation method, "Last In, First Out," where the most recently produced or purchased items are recorded as sold first.

Periodic Inventory System

An inventory system that updates inventory balances and cost of goods sold at the end of an accounting period based on a physical count.

FIFO

An accounting method for valuing inventory that assumes the first items produced or bought are the first ones sold, standing for First In, First Out.

Weighted-Average Cost Method

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold, weighted by the quantity of goods.