Scenario 12-4 Suppose That Abdul Opens a Coffee Shop.He Receives a Loan

question 465

Multiple Choice

Scenario 12-4
Suppose that Abdul opens a coffee shop.He receives a loan from a bank for $100,000.He withdraws $50,000 from his personal savings account.The interest rate on the loan is 8%,and the interest rate on his savings account is 2%.
-Refer to Scenario 12-4.Abdul's explicit cost of capital is

• A) $8,000.
• B) $4,000.
• C) $2,000.
• D) $1,000.

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Definitions:

Beta

A metric representing the instability or consistent risk involved in a security or portfolio relative to the entire market.

Adjustment Technique

A method or process applied to modify or correct data, parameters, or conditions for a specific purpose, such as statistical analysis or financial models.

Regression Analysis

A statistical method for estimating the relationships among variables, often used to determine how the typical value of the dependent variable changes when one of the independent variables is varied.

Intercept

The point where a line, curve, or surface intersects a coordinate axis.