The Debt Ratio Will Increase by More in Any Given

question 12

Multiple Choice

The debt ratio will increase by more in any given year when

• A)the real interest rate is lower.
• B)the growth rate of GDP is higher.
• C)the initial debt ratio is greater.
• D)all of the above
• E) none of the above

---

Definitions:

Fair Value

The estimated price at which an asset or liability could be traded in an arm's length transaction between informed, willing parties.

Pro-Rata Share

A portion of something that is divided among participants in proportion to their share, interest, or contribution.

Proportionate Consolidation Method

A method of accounting where a parent company includes its share of the assets, liabilities, income, and expenses of a joint venture or associate in its financial statements proportionate to its ownership interest.

Identifiable Net Assets Method

An accounting technique used to value a company by identifying and valuing its tangible and intangible assets separately from goodwill.