Darya Has an Arrangement in Which She Buys a Bulk

question 14

Multiple Choice

Darya has an arrangement in which she buys a bulk of handbags and resells them for low cost on the streets of Brooklyn. Darya is probably a(n) __________ who buys the goods from a(n) __________ shoplifter.

• A) Kleptomaniac, juvenile
• B) addict, homeless
• C) amateur, kleptomaniac
• D) fence, professional

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Definitions:

Tax Shield

The reduction in income taxes that results from taking an allowable deduction from taxable income, such as mortgage interest or depreciation.

Coupon Rate

Yearly rate of interest paid on a bond, expressed in terms of percentage of its face value.

Unlevered Firm

A firm that operates without any debt in its capital structure, using only equity for financing.

After-Tax Net Income

The amount of money that remains after all taxes have been deducted from a company's gross income.