Financial Deficits Are Created When

question 44

Multiple Choice

Financial deficits are created when:

• A) profits and retained earnings are greater than the capital-spending requirement.
• B) profits and retained earnings are less than the capital-spending requirement.
• C) profits and retained earnings are equal to the capital-spending requirement.
• D) All of these.
• E) None of these.

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Definitions:

Coupon

In finance, a coupon refers to the interest payment received by a bondholder from the bond's issuer at specified intervals.

Market Rate of Return

The average rate of return of investments in the market over a specific period.

Coupon Bonds

Bonds that pay the holder a fixed interest payment (coupon) periodically until the maturity date, at which point the principal is repaid.

Rate of Return

The increase or decrease in an investment's value within a specific time frame, represented as a percent of the investment's original price.