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Suppose That You Took Out a $1,000 Loan in January

question 213

Multiple Choice

Suppose that you took out a $1,000 loan in January and had to pay $75 in annual interest. During the year, inflation was 6 percent. Which of the following statements is CORRECT?


Definitions:

Debt Ratio

A financial ratio that measures the extent of a company's leverage, indicating the proportion of its assets that are financed with debt.

Liabilities

Financial obligations or debts that a company owes to others, due for payment in the future.

Company's Risk

The exposure to potential financial losses or operational failures that a company faces.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership interest.

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