Why Is the Unencumbered Status of Assets Considered to Be

question 67

Multiple Choice

Why is the unencumbered status of assets considered to be a distinguishing characteristic?

• A) They are typically worth more than the existing debt.
• B) They are typically acquired after giving a security interest.
• C) Lenders typically find them most attractive as security.
• D) Lenders typically find their portability to be a risk.

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Definitions:

Frame Dependence

The influence of presentation or context on decision-making outcomes.

Loss Aversion

A cognitive bias where the pain of losing is psychologically about twice as powerful as the pleasure of gaining, impacting financial and investment decisions.

Professional Fund Managers

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Outperform

A term used in the finance industry to describe an investment that is expected to perform better than the market average or a benchmark index.