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One Thing Lenders Sometimes Require When Loaning Money to a Small

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Essay

One thing lenders sometimes require when loaning money to a small corporation is an assignment of the common stock as collateral on the loan. Then,if the business fails to repay its loan,the ownership of the stock certificates can be transferred directly to the lender. Why might a lender want such an assignment?
What advantage of the corporate form of organization comes into play here?


Definitions:

Cognitive Goal Setting

The process of establishing clear, specific, and challenging cognitive objectives aimed at enhancing individual or group performance.

Divergent Thinking

A thought process or method used to generate creative ideas by exploring many possible solutions and approaches.

Social Loafing

The tendency of individuals to exert less effort when working in a group compared to when they work alone.

Production Blocking

A process loss in brainstorming sessions where individuals have to wait their turn to contribute ideas, potentially forgetting or discarding them in the meantime.

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