An Interest-Sensitive Asset or Liability Must

question 8

Multiple Choice

An interest-sensitive asset or liability must:

• A) have a maturity of less than 90 days.
• B) have a rate that shifts in the opposite direction to market changes.
• C) have a rate that changes as market conditions alter during the organisation's specified planning period.
• D) always be an asset issued for a short-term period.

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Definitions:

Break-even Point

The level of sales or production at which total revenues equal total costs, resulting in neither profit nor loss.

Contribution Margin

The selling price of a product minus the variable cost per unit, used to cover fixed costs and contribute to net profit.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time.

Variable Costs

Expenses which are dependent on the volume of activity within a business.