One of the Primary Factors That Influences the Interest Rate

question 157

Multiple Choice

One of the primary factors that influences the interest rate a firm pays on long-term loans is the

• A) intensity of competition the firm faces with new products.
• B) current level of government regulations.
• C) general level of market interest rates.
• D) exchange rate of the euro to the U.S. dollar.

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Definitions:

Credit Balances

Balances within accounts that indicate the amount owed to a creditor; commonly found in liability and equity accounts.

Stockholders' Equity

Shareholders' equity in a corporation, defined by the excess of asset value over the amount of liabilities.

Interest Expense

The cost incurred by a company for borrowing funds, represented as the interest payments made on any borrowed capital.

Operating Income

Earnings before interest and taxes (EBIT), calculated by subtracting operating expenses from gross profit.