A Less-Established Company, or a Company with a High Debt

question 121

Multiple Choice

A less-established company, or a company with a high debt to equity ratio, would be considered a riskier investment to the lender. Which of the following principles attests to this axiom?

• A) direct relationship principle
• B) compensating balance concept
• C) risk/return trade-off
• D) cost-benefit analysis

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Definitions:

Hemoglobin Level

A measurement of the concentration of hemoglobin in a person's blood, indicating the blood's capacity to carry oxygen.

Myocardial Infarction

Necrosis of a portion of cardiac muscle caused by obstruction in a coronary artery.

Coronary Artery

An artery that supplies blood to the heart muscle itself, vital for heart function and health.

Ischemia

Decreased blood supply to a body part such as skin tissue or to an organ such as the heart.