The Slope of a Downward-Sloping Straight Line Can Be Calculated

question 160

Multiple Choice

The slope of a downward-sloping straight line can be calculated as the distance from the

• A)horizontal intercept of the line to the origin divided by the distance from the origin to the vertical intercept of the line.
• B)origin to the horizontal intercept of the line minus the distance from the origin to the vertical intercept of the line.
• C)vertical intercept of the line to the origin divided by the distance from the origin to the horizontal intercept of the line.
• D)vertical intercept of the line to the origin minus the distance from the origin to the horizontal intercept of the line.

---

Definitions:

Lenders

Individuals or institutions that provide funds to borrowers under the agreement that the funds will be repaid with interest.

Interest Rate Model

A mathematical model used to forecast future interest rates or to price financial derivatives and manage interest rate risk.

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk of default.

Pure Interest Rate

The earning power of money. An interest rate without an inflation component or premiums for risk.