The Return (Ri) on a Loan Can Be Measured as Follows

question 36

Multiple Choice

The return (Ri) on a loan can be measured as follows:

• A)AISi - E(Li), whereby E(Li) = (EDFi * LGDi)
• B)AISi - E(Li), whereby E(Li) = (EDFi / LGDi)
• C)AISi + E(Li), whereby E(Li) = (EDFi * LGDi)
• D)AISi + E(Li), whereby E(Li) = (EDFi / LGDi)

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Definitions:

Investee Net Income

The portion of net income earned by a company that is attributed to minority investors.

Dividend Revenue

Income received from investments in the form of dividends, typically from shares of stock held in another company.

Cost Method

An accounting approach used to record investments, where the investment is recorded at its acquisition cost without recognizing interim income or losses.

Long-Term Investment

An asset that a company intends to hold for more than one year for the purpose of generating revenue.