[Rough Start] Allison,who Just Graduated from College,wanted to Buy a New

question 28

Multiple Choice

[Rough Start] Allison,who just graduated from college,wanted to buy a new car.However,she did not have much of a credit history,and the bank would not give her a loan unless she had a cosigner who agreed to be liable on the loan along with Allison.Allison's father cosigned with Allison on her loan at the bank.Allison also wanted to start a real estate business.She needed funds with which to do so.Her boyfriend,Sean,promised the bank,in writing that he would pay Allison's start-up loan for the real estate business if Allison did not do so.Unfortunately,Allison did not make any money in the real estate business.She went bankrupt along with Sean,who had been acting as her receptionist.
-The agreement entered into between Allison's father and the bank is called what?

• A)A guaranty
• B)An acknowledged agreement
• C)An executory promise
• D)A suretyship
• E)A certified agreement

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Definitions:

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and loan payments.

Selling Price

The amount at which a product or service is offered to the market.

Variable Cost

Expenses that change in proportion to the activity or volume of a business, such as raw materials and labor costs directly tied to production levels.

Average Variable Cost

This is the average amount of variable costs (costs that change with production levels) per unit produced.