Which of the Following Would Not Help a Surety Defend

question 21

Multiple Choice

Which of the following would not help a surety defend himself from payment of a debt?

• A) There was no consideration for the surety agreement.
• B) There was a modification of the underlying contract.
• C) The creditor knew the loan was risky and did not dissolve it.
• D) There was fraud in the execution of the surety agreement.

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Definitions:

Sunk Cost

Expenses that have been paid and cannot be retrieved, and therefore, should not impact upcoming business strategies.

Opportunity Cost

The benefit foregone by choosing one alternative over another.

Financing Costs

Expenses incurred by an entity in borrowing funds, including interest, fees, and other charges associated with the issuance of debt.

Incremental Cash Flow

The additional cash flow generated by a company from a new project or investment, after accounting for expenses.