The Key Intuition of a Z-Score Model Like Altman's Is

question 32

Multiple Choice

The key intuition of a Z-score model like Altman's is that:

• A)only publicly traded firms can be evaluated.
• B)one will be just as well off by guessing on default rates.
• C)all corporations will default at least once.
• D)financial profiles of bankrupt and non-bankrupt firms are very different one year prior to bankruptcy.
• E)privately traded firms disclose better financial information to lenders.

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Definitions:

Interest Income

Income earned from investments, savings, or credit extended, such as interest on bonds, savings accounts, or loans provided to others.

Interest Accrued

The amount of interest that has been earned or incurred but has not yet been paid or received.

Note Paid

Represents the full repayment or settlement of the amount owed as denoted in a promissory note.

Interest Accrued

Interest that has been earned but not yet received or recorded.