Which of the Following Statements Does NOT Reflect Credit Decisions

question 82

Multiple Choice

Which of the following statements does NOT reflect credit decisions at the retail level?

• A)Loans to retail customers are more likely to be rationed through interest rates than loan quantity restrictions.
• B)Most loan decisions at the retail level tend to be accept or reject decisions.
• C)Mortgage loans often are discriminated based on loan to price ratios rather than interest rates.
• D)Household borrowers require higher costs of information collection for lenders.
• E)Retail loans tend to be smaller than wholesale loans.

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Definitions:

Equity Capital

Funds raised by a company through the sale of common or preferred stock.

Cost of Capital

The necessary return rate on investments a firm must attain to keep its market price stable and appeal to investors.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and the present value of cash outflows.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in the context of evaluating investment opportunities.