The Concept of Subrogation Applies to the Liability of a Guarantor

question 38

Multiple Choice

The concept of subrogation applies to the liability of a guarantor under a loan guarantee. Under the concept of subrogation:

• A) the lender can sue the guarantor if there is default by the borrower under the loan
• B) the lender must attempt to collect from the borrower before pursuing the guarantor for payment of the loan
• C) the lender must attempt to realize on any security for the loan before claiming from the guarantor
• D) the guarantor that compensates a lender takes over the right of the lender to sue the borrower
• E) none of the above.

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Definitions:

Profit-maximizing Output

The level of production at which a company can achieve the highest possible profit, determined by the intersection of marginal cost and marginal revenue.

Demand

The quantity of a good or service that consumers are willing and able to purchase at each possible price level.

Cost Data

Information regarding the expenses incurred in the production, operation, or undertaking of a project, activity, or product.

Monopolistically Competitive

An arrangement in the economy where countless firms are selling products that look similar but are unique, thus permitting them a slight advantage in the market.