Midterm2 Questions - Student

Midterm2 Questions - Student - QUESTIONS FOR CHAPTER TEN 1)...

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QUESTIONS FOR CHAPTER TEN 1) What is meant by “information problematic” as it relates to a company? What is the relevance of this concept? 2) What are affirmative covenants? 3) What is meant by a negative covenant in a loan? 4) What are the five principal negative covenants? 5) What is a negative pledge clause ? 6) In negotiating a loan, what does the author mean by putting yourself in the head of the lender ? 7) According to the author, how do you develop a strategy for getting a loan? 1
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QUESTIONS FOR CHAPTER ELEVEN 1) What is the Uniform Commercial Code? What two forms does a lender deal with using this Code? 2) What is a “signature loan”? 3) In accounts receivable financing, what is meant by an “eligible” A/R? 4) What is a typical lending rate for A/R’s? 5) What is meant by a “concentration” factor? By a diffusion factor? 6) If a bank will loan on inventory, what is the usual maximum percentage they will lend? 7) How can warehousing be used for inventory lending? 8) On what basis do banks and finance companies lend on equipment? 9) What are the two types of “quick sale“ value? 10) What are the three types of appraisers? 11) What is the usual percentage lenders loan on equipment? 12) How does borrowing from finance companies differ from borrowing from banks? 13) What is accounts receivable “factoring”? 14) When factoring, what does “with recourse” and “without recourse” mean? 15) When factoring, what does “with notification” and “without notification” mean? 16) When a loan agreement is written with the “Rule of 78,” what does this mean? 2
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1) What is a “letter of credit”? 2) When ordering something from abroad, why is a letter of credit better than a wire transfer? 3) What are “revocable” and “irrevocable” letters of credit? 4) What is a ‘documented” and a “clean” L/C? 5) What is a “standby L/C? 6) What is the significance of a “confirmed” L/C? 7) When a L/C says that the L/C is payable at “sight,” what does this mean? 8) Give two examples of the use of “clean” L/Cs. 9) What are three ways to do business without a strong balance sheet? 10) What is a “transferable” L/C? 11) What is an “assignment of proceeds”? 12) What two costs are involved in L/Cs? 13) When a customer gives a foreign entity a “revolving L/C, what problem might this involve? 14)
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Midterm2 Questions - Student - QUESTIONS FOR CHAPTER TEN 1)...

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