Which of the Statements Below Is FALSE

question 48

Multiple Choice

Which of the statements below is FALSE?

• A)A part of the default premium has to do with the frequency of default by the borrower.
• B)For the home loan,the collateral (the house)is an asset that will increase in value over time (in general),compared with a car loan in which the collateral (the car)decreases in value over time.
• C)With a car,the potential loss due to default is less than a house because the growing value of the asset should be sufficient to cover the outstanding balance (principal)of the loan.
• D)A personal credit card essentially has no collateral,so the potential loss is even higher if the customer defaults on his or her credit card payments.

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Definitions:

Fixed Assets

Durable physical assets employed in a company's operations, which are not anticipated to be turned into cash quickly.

Net Cash

The amount of cash available after all cash inflows and outflows have been accounted for over a specific period.

Inventory Turnover

A metric that displays the frequency at which a company's stock is sold and replenished during a certain timeframe.

COGS

The Cost Of Goods Sold; it represents the direct costs attributable to the production of the goods sold by a company.