Which statement correctly describes the relationship between loan repayment source and loan
a. the source of repayment determines the loan structure
b. the source of repayment determination comes after the loan has been properly structured
c. the loan structure and source of repayment are unrelated
d. the loan structure is not important if a loan is fully collateralized with liquid assets
Which option presents the primary source of repayment for most commercial loans?
a. the liquidation of fixed assets provided as collateral
b. the willingness and capacity of the borrower
c. the rental income from non-owner-occupied property
d. the liquidation of current assets provided by the borrower
Which option typically is the secondary source of repayment for a mortgage loan?
a. conversion of current assets
b. liquidation of fixed assets
c. liquidation of current assets
d. conversion to construction loan
Which aspect of collateral viability relates to the fact that some assets lose value more rapidly than others?
b. cost to liquidate
In which situation is a personal guarantee typically classified as a secondary source of repayment?
a. the guarantor appears to have more financial strength than the collateral of the borrower
b. the collateral of the borrower appears to have more value than the financial strength of the guarantor
c. the primary source of repayment is excess operating cash flow from multiple operating cycles of the business
d. the guarantor appears to have more financial strength than the operating cash flow of the borrower
Which characteristic of collateral is defined as the ease with which the collateral can be converted to cash?
a. dependability of value
Which type of collateral is typically associated with issues such as concentration, internal control, and invoicing?
a. marketable securities
d. plant and equipment
Which intangible asset can be reported on a firm's balance sheet strictly because, or as a result of, a merger or acquisition involving that firm?
Which viability and valuation factor is represented by the ability of the borrowing business to track its inventory?
a. seasonal products
b. internal controls
How does a business banker measure the willingness of the guarantor to support a borrowing business?
a. by accurate tax returns
b. by previous examples
c. by dependence of personal financial condition on the financial condition of the borrowing business
d. by the likelihood of legal challenges