The Interest Rate Charged on Secured Short-Term Loans to a Corporation

question 43

Multiple Choice

The interest rate charged on secured short-term loans to a corporation is generally higher than that charged on unsecured short-term loans because

• A) lenders of secured loans must pay more for their funds.
• B) it is costly to negotiate and administer secured loans.
• C) secured loans are less risky than unsecured loans.
• D) the risk of default is lower on secured loans.

---

Definitions:

Indirect Responsibilities

Duties or obligations not directly tied to one's primary job function but essential for supporting broader organizational goals.

Value Creation

Value Creation involves processes or activities that increase the worth of a product or service, enhancing its value to consumers and leading to competitive advantage.

Shareholder Value

The financial worth delivered to shareholders of a corporation due to management's ability to increase earnings, dividends, and share price.

Financial Accounting

The field of accounting that focuses on the preparation of financial statements to provide information to external users, such as investors and creditors.