A Loan Officer Uses a Credit Scoring System to

question 20

Multiple Choice

A loan officer uses a credit scoring system to

• A)compare the interest rate on a loan to interest rates on other assets with comparable risk.
• B)keep track of the fraction of a bank's assets tied up in loans to a single individual or business.
• C)predict statistically whether an individual is likely to default on a loan.
• D)match any particular loan with the deposits being used to fund it.

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Definitions:

Attachment

A legal procedure by which a court of law, at the request of a creditor, designates specific property owned by the debtor to be transferred to the creditor, or sold for the benefit of the creditor.

Security Interest

A legal claim or right granted by a debtor to a creditor over the debtor’s property, which secures payment or performance of an obligation.

Debtor

An entity or person that owes money to another, the lender or creditor.

Consideration

An essential element in contract law, referring to the exchange of something of value between parties as part of an agreement.