The interest rate charged to AAA corporate borrowers is 7.8% for 5 year bonds. The interest rate
Question:
The interest rate charged to AAA corporate borrowers is 7.8% for 5 year bonds. The interest rate charged to BBB corporate borrowers is 8.8% for five year bonds. The differences between these two rates of interest can best be explained by the following factors.
a Inflation and Maturity Risk
b Maturity Risk and Default Risk
c Default Risk and Liquidity Risk
d Liquidity Risk and Inflation
e Inflation and Default Risk
Q.288Â Extending the time which a firm takes to pay its trade credit has the effect of:
a Increasing the opportunity cost of using trade credit
b Has no effect on the opportunity cost of using trade credit
c Decreases the opportunity cost of using trade credit
d Reducing the firm’s reliance on trade credit
e None of the above describe the effect of extending the time for which a firm takes to pay its trade credit
Q.322 Ratios are useful for all of the following reasons, except:
a Ratios standardize numbers and facilitate comparisons
b Ratios are used to highlight weaknesses and strengths.
c Ratios help to create projections.
d Ratios help to track individual sales opportunities
e All of the these are reasons that ratios are useful
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield