The Effective Financing Rate

question 41

Multiple Choice

The effective financing rate:

• A) adjusts the nominal interest rate for inflation over the period of concern.
• B) adjusts the nominal interest rate for the change in the spot exchange rate over the period of concern.
• C) adjusts the nominal rate for a change in foreign interest rates over the period of concern.
• D) adjusts the nominal rate for the forward discount (or premium) over the period of concern.

Differentiate between mistakes in contract terms and how they affect contract enforceability.

Recognize the elements required to establish a case of fraud, including reliance and misrepresentation.

Understand the role of physical compulsion and improper threats as forms of duress in contract law.

Understand and identify various forms of misrepresentations and their requirements for relief.

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Definitions:

Applied Overhead

The estimated amount of overhead costs assigned to individual units of production, based on a predetermined allocation rate.

Factory Overhead

Those manufacturing costs that are not directly tied to the production process but are necessary for production to occur, such as maintenance, utilities, and salaries of indirect labor.

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including materials and labor.

Credit Balance

The amount of money that a financial institution owes to a customer in a particular account.