Which of the Following Statements Concerning Variable Costs Is (Are)

question 39

Multiple Choice

Which of the following statements concerning variable costs is (are) correct?
I. Variable costs minus fixed costs equal marginal costs.
II. Variable costs are equal to zero when production is equal to zero.
III. An increase in variable costs increases the operating cash flow.

• A) II only
• B) III only
• C) I and III only
• D) II and III only
• E) I and II only

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Definitions:

Annual Coupon

The yearly interest payment made to bondholders, based on the bond's face value.

Yield to Maturity

The total return expected on a bond if it is held until the date it matures.

Maturity Risk Premium

The additional yield that investors demand to compensate for the risk of holding a longer-term debt instrument, over and above the risk of short-term instruments.

Default Risk

The risk that a borrower will not make the required payments on their debt obligations, leading to a default.