Match Each Definition That Follows with the Term (A-H) It

question 17

Multiple Choice

Match each definition that follows with the term (a-h) it defines.
-A company's ability to make interest payments and repay debt at maturity

• A)Solvency
• B)Leverage
• C)Times interest earned
• D)Horizontal analysis
• E)Vertical analysis
• F)Common-sized financial statements
• G)Current position analysis
• H)Profitability analysis

---

Definitions:

Cost of Debt

The effective rate that a company pays on its current debt, calculated as the interest expense on the debt divided by the total debt.

Security Market Line

A line in the Capital Asset Pricing Model (CAPM) that represents the relationship between the expected return of a security and its systemic risk.

Systematic Risk

The risk inherent to the entire market or an entire market segment, influenced by factors such as economic, geopolitical, and financial events, which cannot be eliminated through diversification.

Expected Return

The anticipated return on an investment, factoring in the probability of various outcomes.