Which Types of Models Are Built with Assumptions

question 11

Multiple Choice

Which types of models are built with assumptions?

• A)economic models,but not models in other disciplines such as physics and biology
• B)economic models as well as models in other disciplines such as physics and biology
• C)models that are built for teaching purposes but not for research purposes
• D)bad models

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Definitions:

Redeemed

The act of repurchasing or paying off a security such as a bond or preferred stock at its maturity or before.

Loss On Redemption

The financial loss experienced when a debt security is redeemed before its maturity date for more than its par value.

Carrying Value

The book value of an asset on a company’s balance sheet, calculated as the original cost minus accumulated depreciation.

Bonds

Long-term debt securities issued by corporations or government entities that pay periodic interest until maturity, at which point the face value is repaid.