Which of the Following Is a Characteristic of a Typical

question 62

Multiple Choice

Which of the following is a characteristic of a typical private placement of debt?

• A) It carries a variable interest rate.
• B) Its maturity is shorter than most bank loans.
• C) Because of the higher risk, more restrictions are imposed on the borrower than with a comparable bank loan.
• D) It operates much like a bond, but its terms are tailored to the borrower's individual needs, as a loan would be.

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Definitions:

Fixed Overhead

This term refers to indirect costs of running a business that do not change with the level of production or sales, such as rent, utilities, and salaries.

Variable Overhead Rate

The ratio of variable overhead costs to activity drivers such as hours worked or units produced.

Actual Production

The actual quantity of goods or services produced over a specific period, often compared to planned or theoretical production levels.

Favorable Volume Variances

Differences between planned and actual production volumes that result in lower costs or higher profits.