Property That Is Pledged to the Lender in the Event

question 39

Multiple Choice

Property that is pledged to the lender in the event that a borrower cannot make his or her debt payment is called

• A)collateral.
• B)points.
• C)interest.
• D)good faith money.

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Definitions:

Tax Rate

The proportion of income that the government takes from a person or company as taxes.

Incremental Cash Flow

The additional cash flow generated by a company as a result of engaging in a specific project or activity.

Cannibalization

The loss of sales of an existing product due to the introduction of a new product by the same company.

Sunk Costs

Expenditures that have been made and cannot be recovered, and should not influence ongoing investment decisions.