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The Sum of the Default-Risk Premium Plus the Term-Risk Premium

question 139

True/False

The sum of the default-risk premium plus the term-risk premium on a business loan is one of the elements of the cost-plus loan pricing method.


Definitions:

Net Profit Margin Ratio

A profitability ratio calculated by dividing net income by net sales, showing how much profit a company makes for every dollar of its sales.

Gross Sales Revenue

the total amount of sales generated by a business before any deductions are made.

Sales Returns

Sales Returns represent the goods returned by customers to the seller, which leads to a reversal of sales revenue.

Quick Ratio

Quick Ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets.

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