The Main Difference Between Promissory Notes and BABs Is That

question 36

Multiple Choice

The main difference between promissory notes and BABs is that:

• A)the yield on promissory notes is considered a 'risk-free' rate
• B)promissory notes trade at a common yield
• C)BABs are much riskier because the borrowers are less creditworthy
• D)BABs are accepted before they are issued
• E)All of these.

Understand the concept of price discrimination and its acceptability under specific conditions.

Identify the steps involved in setting prices within a competitive environment.

Recognize the effects of international pricing strategies and the influence of import/export taxes.

Understand the influence of cost on pricing tactics and the rationale behind price adjustments.

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Definitions:

Regression Coefficient

A quantitative measure in statistics that represents the strength and direction of the relationship between a dependent variable and an independent variable in a regression analysis.

Single Factor Model

A model that explains the returns of an asset or portfolio using a single risk factor.

SMB Beta

A measure used in finance to assess the sensitivity of a stock's return relative to the size factor in an asset pricing model.

Factor Portfolio

A portfolio that is constructed to have a high sensitivity to certain economic or financial factors, aiming to capture specific risk premiums.