A Default Is an Example of a Drastic Action,economically Speaking,because

question 27

Multiple Choice

A default is an example of a drastic action,economically speaking,because it __________.

• A)bolsters lenders' confidence,but results in cutoff of future loans
• B)obliterates lenders' confidence,but results in future loans
• C)obliterates lenders' confidence and results in cutoff of future loans
• D)bolsters lenders' confidence and results in future loans

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Definitions:

Net Present Value

A calculation that compares the present value of all cash inflows and outflows of a project or investment using a specific discount rate.

One-Shot Approach

A method or strategy executed with a single attempt, without the prospect of repetition.

Monthly Interest Rate

The interest rate applied to a loan or debt for a one-month period, often used to calculate the monthly interest payments.

Variable Cost

A type of cost that varies with production volume, increasing as production increases and decreasing as production decreases.