Which of the Following Statements Is True

question 56

Multiple Choice

Which of the following statements is true?

• A)The risk of a loan reflects the volatility of the loan's default rate around its expected value times the amount lost given default.
• B)The product of the volatility of the default rate and the loss give default (LGD) is called the 'unexpected loss'.
• C)The product of the volatility of the default rate and the loss give default (LGD) is a measure of the loan's risk.
• D)All of the listed options are correct.

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Definitions:

Low-Income Taxpayers

Individuals with earnings below a certain threshold, often eligible for certain tax benefits or lower tax rates.

Vertical Equity

The idea that taxpayers with a greater ability to pay taxes should pay larger amounts.

Tax System

The structured framework within which public authorities collect taxes from individuals and companies to fund public expenditures.

Ability-To-Pay Principle

The idea that taxes should be levied on a person according to how well that person can shoulder the burden