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The Business Loan Pricing Method That Bases a Loan Rate

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The business loan pricing method that bases a loan rate on a relatively low money market interest rate (such as the Federal funds rate) plus a small margin to cover risk exposure and a profit margin is known as the:


Definitions:

Inventory

The complete stock of goods and raw materials a company maintains for purposes of resale or to be used in the creation of products.

Gross Method

An accounting method for recording purchases at the full invoice price without deducting any cash discounts.

Sales Discounts

Reductions in sales price offered to customers, typically to prompt early payment or bulk purchases.

Adjusting Entry

A journal entry made at the end of an accounting period to record any unrecognized income or expenses for that period, ensuring the accounts are up to date.

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