In Making Credit Decisions, Which of the Following Items Is

question 52

Multiple Choice

In making credit decisions, which of the following items is considered a market-specific factor?

• A)Whether the reputation of the borrower enhances the credit application.
• B)Whether the current debt-equity ratio is sufficiently low to not impact the probability of repayment.
• C)Whether the debt can be secured by specific property.
• D)Whether the position of the economy in the business cycle phase would affect the probability of borrower default.
• E)Whether the volatility of earnings could present a period where the periodic payment of interest and principal would be at risk.

---

Definitions:

Social Exchange Theory

explores how human relationships are formed and maintained based on the exchange of resources, including tangible goods and intangible services, and the perceived costs and benefits of these exchanges.

Trend Analysis

The practice of collecting and analyzing data to identify patterns, changes, and potential future movements in a specific market or field of interest.

Motivated Behavior

Actions that are driven by internal or external stimuli to fulfill a need or achieve a goal.

Homeostatic Action

The processes by which bodily systems maintain internal stability and balance in response to external changes.