If the Maximum Loan-To-Value Ratio That a Lender Will Accept

question 38

Multiple Choice

If the maximum loan-to-value ratio that a lender will accept on a $100,000 loan is 90 percent,then the borrower must make

• A) a minimum down payment of $10,000 plus closing costs.
• B) a minimum down payment including closing costs of $10,000.
• C) closing costs plus points of $10,000.
• D) a maximum down payment of $10,000.
• E) none of these.

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Definitions:

Cash Cycles

The amount of time it takes for a business to convert its investments in inventory and other resources into cash flows from sales.

Accounts Payable Turnover

A financial ratio that measures the rate at which a company pays off its suppliers by comparing total purchases to average accounts payable.

Inventory Sold

The total cost of goods or merchandise a business has sold to customers during a specific period, key for calculating cost of goods sold.

Factored Receivables Financing

A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.