If a Bank Loan Officer Were Considering a Company's Request

question 80

Multiple Choice

If a bank loan officer were considering a company's request for a loan, which of the following statements would you consider to be CORRECT?

• A) Other things held constant, the lower the current ratio, the lower the interest rate the bank would charge the firm.
• B) The lower the company's EBITDA coverage ratio, other things held constant, the lower the interest rate the bank would charge the firm.
• C) Other things held constant, the higher the debt ratio, the lower the interest rate the bank would charge the firm.
• D) Other things held constant, the lower the debt ratio, the lower the interest rate the bank would charge the firm.
• E) The lower the company's TIE ratio, other things held constant, the lower the interest rate the bank would charge the firm.

---

Definitions:

Actuators

Devices that convert electrical, hydraulic, or pneumatic energy into mechanical motion to activate a mechanism.

Byte of Data

A unit of digital information in computing and telecommunications, typically consisting of eight bits, representing a single character of text or a small amount of data.

States

Distinct, defined conditions or phases that matter or systems can occupy, characterized by quantitative properties like temperature and pressure.

Collision Mitigation System (CMS)

Accident avoidance electronics using radar, microwave, and/or video to sense potential accidents and subsequently alert driver, and using chassis data bus to signal the engine brake and service brakes to make an evasive response. An example is Wingman.