A Clause in a Mortgage Loan Contract Requiring the Borrower

question 8

Multiple Choice

A clause in a mortgage loan contract requiring the borrower to purchase homeowner's insurance is an example of a

• A)proscriptive covenant.
• B)prescriptive covenant.
• C)restrictive covenant.
• D)constraint-imposed covenant.

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Definitions:

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers for goods or services sold on credit.

Liquidity

A measure of how easily assets can be converted into cash without affecting their market price.

Profitability

An indicator of how well a company is able to produce profit through its business activities.

Liquidity

A measure of how easily assets can be converted into cash or cash equivalents without significantly altering their value, essential for meeting short-term obligations.