Assuming That a Credit Decision Has Been Analyzed and Credit

question 45

Multiple Choice

Assuming that a credit decision has been analyzed and credit refused due to a negative expected profit, which of the following changes, if of sufficient magnitude, might change the decision to one of approval?

• A) Increase the percentage of profit margin
• B) Decrease the probability of payment
• C) Increase the discount rate
• D)Reduce the selling price

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Definitions:

Marginal Rate

A measure of the rate of change in a variable as another variable changes incrementally, often used in the context of taxes or utility.

Cheese Doodles

A popular snack food, typically extruded, corn-based, and coated with a cheese-flavored powder.

Complements

Two goods for which an increase in the price of one leads to a decrease in the quantity demanded of the other.

General Equilibrium

A state in an economy where all markets are in equilibrium, with supply equaling demand across all sectors.