In Making Credit Decisions, Which of the Following Items Is

question 52

Multiple Choice

In making credit decisions, which of the following items is considered a market-specific factor?

• A)Whether the reputation of the borrower enhances the credit application.
• B)Whether the current debt-equity ratio is sufficiently low to not impact the probability of repayment.
• C)Whether the debt can be secured by specific property.
• D)Whether the position of the economy in the business cycle phase would affect the probability of borrower default.
• E)Whether the volatility of earnings could present a period where the periodic payment of interest and principal would be at risk.

Understand the single-entry system and the usage of patient ledger cards.

Recognize the terminology used in check writing and bookkeeping.

Understand the importance of accuracy in bookkeeping procedures.

Know the legal and financial instruments used in managing finances for others.