The borrowing base used to guarantee collateral on an operating line of credit is highly dependent on the valuation rates allowed on short-term assets by the lender. A. True B. False

Q: If a firm is interested in the current cost of its debt obligations, then it can simply look at the…

A: Cost on debt can be considered after deducting tax expenses. Cost of debt is eligible for tax…

Q: Which of the following concerning short-term financing methods is CORRECT? Group of answer choices:…

A: Short-term financing is an important method to raise the funds for the short-term working capital…

Q: Which of the following statements is not correct? Select the correct response: The principal amount…

A: ANSWER: WHEN A NON CASH ASSET IS ACQUIRED AND THE STATED RATE OF INTEREST IS DIFFERENT FROM THE…

Q: the lending operation, how many types of loans security?

A: In lending operations banks for their safety of loans ask  for some collateral.You have to provide…

Q: How can the effect of below-market-rate loans on value be determined using investor criteria?

A: Below market interest loan is the loan on which interest rate is charged less than the current…

Q: Give and explain the factors that affect the interest rate on the loan

A: Following are the factors that affect interest rate on the loan:  1. Supply and Demand Interest…

Q: What is the difference between a credit sale (with a higher price as compared to the cash sale) and…

A: The amount of Sales made in credit has to be collected after certain period of time. In case of cash…

Q: What is the difference between a line of credit and a short-term loan?

A: Short term loan:   A loan is borrowed money that is to be paid back along with the interest. A…

Q: Most lenders do not require collateral for short-term financing.; True or False

A: Collateral refers to something that is pledged in order to repay a loan and which can be forfeited…

Q: Loans are collateralized to: a increase returns b increase liquidity c reduce concentration risk d…

A: Note: Since you have posted multiple questions, we will solve the first question for you as per…

Q: In hedging, interest rate swap (IRS) can be used to hedge against rising rates, falling rates,…

A: Hedging is a technique or a strategy which is used to reduce any risk involved in investment. This…

Q: Collateral does not reduce the risk of a loan per se, because A. it is not part of the loan…

A: Collateral = It refers to asset, being pledged by bank against the loan given to its customer in…

Q: Notes receivable should be stated at amortized cost which is equivalent to its present value which…

A: The Amortised cost is the present value of cash inflows from note receivable using an effective…

Q: a. Bank loans are classified as investment-grade and leveraged bank loans. Explain the difference…

A: (a) Bank Loan extended to corporate borrowers can be segregated into two categories viz.…

Q: t relevant assertion should be used to record loans receivable net of an allowance for loan losses…

A: A loan receivable is that the amount of money owed from a human to a creditor (typically a bank or…

Q: Describe a short-term financing option and discuss the advantages and disadvantages.  Is there a…

A: Short term financing: Any loan that is obtained for a short period of time is Short Term financing.…

Q: In hedging, interest rate swap (IRS) can be used to hedge against rising rates, falling rates,…

A: to understand the topic better, the interest rate swap is defined as the contract between any two or…

Q: There is a formula that will find the APR, i, of a single payment loan but not for a series of…

A: The term “annual percentage rate (APR)” refers to the annual rate of interest charged to borrowers…

Q: Transaction costs incurred the effective interest rate to be used for amortization of an investment…

A: Costs incurred during buying and selling any good or a service are generally referred to as…

Q: Choose True or False: [T / F] Through credit derivatives, a firm can separate the credit risk…

A: Credit derivates is that financial contract that allows creditors to transfer to third party in case…

Q: What two types of current assets are frequently used as security for short-term loans?

A: Short term loans are generally obtained by companies in order to support their temporary business…

Q: Why would lenders, in general, tend to set loan maturities (not amortization, but when the loan…

A: Loan Maturity: The time period for which a loan is extended is known as the loan period.  The date…

Q: What are the main differences between ARMs and FRMs loans? You need to highlight the differences in…

A: Loan which are provides to the borrower either in Adjusted Rate of Mortgage or Fixed Rate of…

Q: Collateral is a valuable asset that is pledged to ensure loan payments. If you fail to repay the…

A: In mortgage loans, collateral is an asset or security used to take loan.

Q: Why might the market value of a loan differ from its outstanding balance?

A: Loan outstanding balance: The outstanding balance or loan balance is the remaining amount that is…

Q: Δ%(MV)  = -MD*Δr When we use this equation to evaluate a loan, this equation does not totally…

A: The values of the loans change when there is a change in the interest rates. The duration helps to…

Q: Explain how an installment loan differs from revolving credit in terms of risk and the nature of the…

A: Installment credit is a type of loan in which the borrower receives a defined, or limited, sum of…

Q: Loans and receivable should be measured subsequent to initial recognition at *   a. Amortized cost…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: The two major components of the interest rate that cause rates to vary across different investment…

A: Maturity risk premium: Maturity risk premium is considering as the amount of additional return you…

Q: Securitization is the financial practice of pooling various types of contractual debt, such as…

A: Securitization is a process in which a financial institution or any company merges its liquid assets…

Q: Which one of the following is a spontaneous source of financing? Select the correct response:…

A: Spontaneous source of financing is the short term financing needed for business transactions which…

Q: . Accounts receivable financing is the term used to describe which of the following types of loans…

A: In Accounts receivable financing companies make a collateral of its account receivables to get loan…

Q: How does getting a secured loan using accounts receivableas collateral differ from factoring?

A: In factoring, the corporation sells their receivable balance to the factoring corporation at a…

Q: How does the uncertain nature of a firm’s sales due to COVID-19 influence its decision regarding the…

A: Explanations are given below

Q: A credit derivative allows creditors and debtors to _________ their exposure to credit risk. For…

A: A credit derivative is a financial contract that allows the parties to minimize their exposure to…

Q: Collateral security is used by the lender when interest is not paid on time the loan is not repaid…

A: Collateral is type of a security that the borrower gives to the lender as a security the loan taken.…