Which of the Following Is a Type of External Credit

question 21

Multiple Choice

Which of the following is a type of external credit enhancement?

• A) Covenants
• B) a surety bond
• C) overcollaterization

---

Definitions:

Compounding

The process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

Future Values

The worth of an asset or money on a predetermined future date that has the same value as a certain amount presently.

Present Values

The value today of a future sum of money or cash flows, when calculated at an agreed-upon return rate.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.