TABLE 9.1 Use the Information for Polaris Corporation to Answer Following Question(s)

question 45

Multiple Choice

TABLE 9.1
Use the information for Polaris Corporation to answer following question(s) .
Polaris is taking out a $5,000,000 two-year loan at a variable rate of LIBOR plus 1.00%. The LIBOR rate will be reset each year at an agreed upon date. The current LIBOR rate is 4.00% per year. The loan has an upfront fee of 2.00%
-Refer to Table 9.1. What portion of the cost of the loan is at risk of changing?

• A)the LIBOR rate
• B)the spread
• C)the upfront fee
• D)all of the above

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Definitions:

Average Outgoing Quality

The average quality level of products after defective items have been removed through screening or quality control procedures.

Inspection

A means of ensuring that an operation is producing at the quality level expected.

Specific Causes

Unique factors or circumstances that can lead to specific outcomes or effects, distinguished from general or common causes.

Acceptance Sampling

A statistical quality control method where a random sample of items from a lot is inspected to decide if the whole lot should be accepted or rejected.