The Two Sectors That Are Normally Regarded as the Lowest

question 52

Multiple Choice

The two sectors that are normally regarded as the lowest risk in the financial market are

• A)T-bills and loans extended to "PIIGS" countries.
• B)demand deposits and loans to countries that have taken austerity measures.
• C)household mortgages and government debt.
• D)government debt and foreign company borrowings.

---

Definitions:

Net Operating Income

A financial metric that calculates a company's profit after subtracting operating expenses, excluding taxes and interest.

Degree Of Operating Leverage

A measure, at a given level of sales, of how a percentage change in sales volume will affect profits. The degree of operating leverage is computed by dividing contribution margin by net operating income.

Variable Costs

Costs that change in proportion to the level of activity or volume of output produced.

Fixed Costs

Overheads that are unaffected by the quantity of output or sales, for example, tenancy costs, wages for staff, and indemnity expenses.