When Accounts Receivable Are Pledged as Collateral for a Loan

question 83

Multiple Choice

When accounts receivable are pledged as collateral for a loan:

• A)title to the receivables is transferred to the lender.
• B)the borrower's customers are usually notified of the pledging arrangement.
• C)the lender assumes the default risk on the receivables.
• D)b and c.
• E)None of the above

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Definitions:

Risk Analysis Software

Computer programs used to identify, assess, and prioritize risks in projects or investments.

Optimization Models

Mathematical techniques used to find the best possible solution or outcome in situations with various constraints and objectives.

Crystal Ball

A metaphor often used to describe the attempt to predict or foresee future events or outcomes, especially in uncertain situations.

Shadow Price

The implied worth or value of a resource that is not priced by the market, often used in cost-benefit analysis or optimization problems.