What Does a Banker Evaluate to Determine a Company's Capacity

question 42

Multiple Choice

What does a banker evaluate to determine a company's capacity to repay a bank loan?

• A) the firm's credit history
• B) the firm's ability to generate cash flows
• C) the collateral used to secure the loan
• D) the character of the owners of the business

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Definitions:

Closed Economies

Economies that do not engage in international trade, relying solely on domestic production for all of their goods and services.

Net Capital Outflow

The difference between the purchase of foreign assets by domestic citizens and the purchase of domestic assets by foreigners.

Net Exports

The surplus or deficit resulting from a country's international trade, calculated as exports minus imports.

Foreign Direct Investment

Foreign Direct Investment (FDI) involves an investment made by a firm or individual in one country into business interests located in another country.