Which of the Following Is Not Likely to Be a Characteristic

question 26

Multiple Choice

Which of the following is not likely to be a characteristic of a numerical credit scoring system?

• A)Used to prescreen credit applications
• B)Used shareholders' income tax returns
• C)Less subjective than using individual loan officers
• D)Most appropriate for consumer loans

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Definitions:

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Equivalent Annual Annuity

A financial concept used to evaluate the annual return of an investment over its lifetime, making it easier to compare the effectiveness of different investment opportunities.

Cost of Capital

The benchmark earnings rate a company must meet with its investments to maintain its price in the market and draw in backers.

Replacement Chain Method

A decision-making process for evaluating the cost-effectiveness of replacing an asset, considering the time span of replacements.