The ________ Compensates the Investor for the Additional Risk That

question 58

Multiple Choice

The ________ compensates the investor for the additional risk that the loan will not be repaid in full.

• A)default premium
• B)inflation premium
• C)real rate
• D)interest rate

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Definitions:

Fixed Expenses

Regular expenses that do not vary in total over a wide range of activity levels.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted; indicates the contribution towards covering fixed expenses and generating profit.

Net Income

The income a company retains after deducting all costs, taxes, and expenses from its total revenue.

Discretionary Fixed Costs

Discretionary fixed costs are fixed expenses that can be adjusted or eliminated without directly impacting the short-term productivity of the business, such as advertising or research and development costs.