Asked by
Precious Persuade
on Nov 07, 2024
Verified
Which of the following is the best definition of a credit cost curve.
A) The process of quantifying the probability of default when granting consumer credit.
B) The length of time that credit is granted.
C) The evidence of indebtedness.
D) Graphical representation of the sum of the carrying costs and the opportunity costs of a credit policy.
E) The process of determining the probability that customers will or will not pay.
Credit Cost Curve
A graphical representation showing the relationship between the cost of credit (interest rates) and the amount of credit available in the market.
Carrying Costs
Carrying costs are the expenses associated with holding inventory, including storage, insurance, and spoilage, among others.
Opportunity Costs
Forgoing possible benefits from different choices when selecting a specific option.
- Determine the financial burdens related to offering credit.
Verified Answer
K2
Learning Objectives
- Determine the financial burdens related to offering credit.