Which of the Following Statements Does NOT Reflect Credit Decisions

question 82

Multiple Choice

Which of the following statements does NOT reflect credit decisions at the retail level?

• A)Loans to retail customers are more likely to be rationed through interest rates than loan quantity restrictions.
• B)Most loan decisions at the retail level tend to be accept or reject decisions.
• C)Mortgage loans often are discriminated based on loan to price ratios rather than interest rates.
• D)Household borrowers require higher costs of information collection for lenders.
• E)Retail loans tend to be smaller than wholesale loans.

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Definitions:

Positive NPV

A scenario in which the net present value of a project's cash inflows exceeds its cash outflows, indicating profitability.

Negative NPV

A situation where the net present value (NPV) of a project or investment is less than zero, indicating that the projected cash flows are insufficient to cover the initial investment.

Discounted Payback Period

The discounted payback period is the time it takes for an investment to generate cash flows sufficient to recover its initial cost, taking the time value of money into account.

Discounted Cash Flows

A valuation method used to estimate the value of an investment based on its future cash flows, adjusted for the time value of money.