A Non-Recourse Loan Is One in Which

question 36

Multiple Choice

A non-recourse loan is one in which

• A)the lender can force repayment of the loan at any time, and the borrower must comply.
• B)the borrower pays the lender a premium that the lender may keep if the borrower defaults on the loan.
• C)the lender is entitled to the proceeds from the sale of any asset collateralizing the loan, but cannot seize any of the other assets of the borrower.
• D)the lender may put a lien on the other assets of the borrower requiring future payment if the proceeds from the sale of the asset collateralizing a loan is not enough to repay the loan
• In full.

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Definitions:

Gain or Loss

This refers to the financial result that occurs when the selling price of an asset differs from its original purchase price, either higher (gain) or lower (loss).

Bonds

Fixed income investment products that represent loans made by an investor to a borrower, typically corporate or governmental.

Effective Interest Method

A technique used in accounting for amortizing the cost of a bond premium or discount over the life of the bond in a way that results in a constant rate of interest over the period.