Which One of the Following Proposes That Lenders Must Be

question 63

Multiple Choice

Which one of the following proposes that lenders must be financially rewarded for loaning funds on a long-term versus a short-term basis?

• A)expectations theory
• B)forward rate theory
• C)market hypothesis
• D)maturity preference theory
• E)Fisher hypothesis

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Definitions:

NPV

Net Present Value, a calculation used to determine the present value of an investment by the sum of its future cash flows minus the initial investment.

Leveraged Lease

A financial arrangement in which a lessor uses borrowed funds to purchase an asset and then leases the asset to a lessee, who pays lease payments that cover the lessor's financing cost and provide a return.

Long-term Lease

A contractual agreement between a lessor and lessee for the use of an asset for a long period, typically exceeding one year.

Nonrecourse Basis

A financing arrangement where the lender can only seize the collateral securing a loan and cannot seek further compensation from the borrower, even if the collateral does not cover the full value of the defaulted amount.