In this material, Valuation is described as the capital rate divided by the income rate. Which expression matches this?

In this material, Valuation is described as the capital rate divided by the income rate. Which expression matches this?

• A. R / I
• B. I / R
• C. Revenue / Income
• D. Assets / Liabilities

Answer: (A)

Valuation is defined as the capital rate divided by the income rate. The capital rate is usually denoted by R and the income rate by I, so the matching expression is R / I. Dividing the capital rate by the income rate directly reflects that description. The inverse, I / R, would represent income rate over capital rate and thus does not fit this definition. The other terms (revenue, assets, liabilities) are unrelated to this specific ratio. For example, if R is 0.10 and I is 0.05, R / I equals 2, illustrating the stated relationship.

Valuation is defined as the capital rate divided by the income rate. The capital rate is usually denoted by R and the income rate by I, so the matching expression is R / I. Dividing the capital rate by the income rate directly reflects that description. The inverse, I / R, would represent income rate over capital rate and thus does not fit this definition. The other terms (revenue, assets, liabilities) are unrelated to this specific ratio. For example, if R is 0.10 and I is 0.05, R / I equals 2, illustrating the stated relationship.