Alice Has Fallen Behind on Her Signature Loan

question 18

Multiple Choice

Alice has fallen behind on her signature loan.She recently received a notice from the lender that her wages were going to be garnished to pay off the debt.What is the loan clause that allows the lender to take this action against Alice because she was in default?

• A)Recovery clause
• B)Default clause
• C)Recourse clause
• D)Deficiency payments clause
• E)None of the above

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Definitions:

Par Common Stock

This represents the nominal or face value assigned to common stock shares, which is the minimal amount shareholders must contribute and is not necessarily related to the market value.

Market Price

The current value at which an asset or service can be bought or sold in a transaction between willing parties.

Shares

Portions of ownership in a company or finance asset, ensuring equitable division of profits through dividends, whenever they are declared.

No-Par Common Stock

Common stock issued without a par value, where the board of directors decides the selling price.