Which of the Following Is True Concerning Opportunity Costs

question 67

Multiple Choice

Which of the following is true concerning opportunity costs?

• A) They are incorporated into formal financial accounting reports.
• B) They entail cash receipts.
• C) They entail cash disbursements.
• D) They require accounting journal entries.
• E) They are relevant for the make/buy decision.

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Definitions:

Interest Rates

Interest rates signify the cost of borrowing money, typically expressed as a percentage of the principal amount loaned.

Inflation Premium

The portion of investment returns that compensates investors for the loss of purchasing power due to inflation.

Yield To Maturity

The overall gain predicted for a bond if it is held all the way to its due date for maturity.

Coupon

The interest rate stated on a bond when issued, which represents the actual amount of interest paid to bondholders.