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777dan777 [17]
3 years ago
14

Last year both a borrower and a lender expected an inflation rate of 3 percent when they signed a long-term loan agreement with

fixed nominal interest rates of 5 percent. If the actual inflation rate were lower than expected, then which of the following would be true?A. The borrower would benefit.B. The lender would benefit.C. The real interest rate would be lower than expected.D. The nominal interest rate would be higher than expected.
Business
2 answers:
aleksandrvk [35]3 years ago
7 0

Answer:

A. The borrower will benefit

Explanation:

The borrower benefits in the sense that the anticipated margin that took a 3% inflation rate into consideration will be smaller than the actual margin when the loan is repaid due to the prevailing inflation rate being smaller than anticipated. In simple English, the value of money the borrower gets at the time of repayment is higher than what was anticipated based on the expected inflation rates

valentina_108 [34]3 years ago
4 0

Answer:

B. The lender would benefit.

Explanation:

Based on the information provided within the question it can be said that in this scenario the one who would benefit from a lower inflation rate would be the lender. That is because by there being a lower inflation rate it means that the money that the borrower needs to pay back the loan does not have the buying power he predicted it would have when he borrowed it. Meaning that he would need to pay more money to the lender than originally anticipated.

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Which of the following is TRUE regarding the economic order quantity (EOQ) model? A. Demand rate is dependent on order quantity.
Oduvanchick [21]

Answer:

D. Holding cost per unit per year is dependent on the selling price per unit.

Explanation:

The formulas are shown below:

Economic order quantity:

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

The number of orders would be equal to

= Annual demand ÷ economic order quantity

The average inventory would equal to

= Economic order quantity ÷ 2

The total cost of ordering cost and carrying cost equals to

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If in the question, the carrying cost is given in the percentage than the per unit cost is come after multiplying it with the selling price per unit

5 0
3 years ago
Which option is an example of a debt-funding source
Furkat [3]

Answer:

The option which is an example of a debt funding source can be banks, credit unions, or any external lender.

Explanation:

  • Debt funding is when a company raises money by marketing bonds, bills and notes, etc. to the investors
  • It differs from equity financing which is selling shares of the company.
  • Debt funding must be paid back at an previously agreed date.
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7 0
2 years ago
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Oksana_A [137]

Answer:

faces exchange rate risk to the extent that it has international competitors in the domestic market.

Explanation:

Exchange rate risk is defined as the risk that exists when a company engaged in transactions that are denominated in a foreign currency rather than the domestic currency.

So if a purely domestic firm that sources and sells only domestically has international competitors in its local market, and the exchange rate is favouring the competitors there will be a risk for them.

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5 0
3 years ago
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