In Making Credit Decisions, Which of the Following Items Is

question 77

Multiple Choice

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

• A)Whether the borrower's capital structure is beyond the point where additional debt increases the probability of loss of principal or interest.
• B)Whether the relative level of interest rates will encourage the borrower to take excessive risks.
• C)Whether property can be pledged as collateral.
• D)Whether the volatility of earnings could present a period where the periodic payment of interest and principal would be at risk.
• E)Whether the record of the borrower is sufficient to create an implicit contract.

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Definitions:

Family Cycle

Refers to the series of stages through which a family goes through over time, covering events from marriage, parenthood to the departure of children and old age.

Major Event

An important occurrence or happening with significant impact or consequence.

Grandchildren Being Born

The event of a person's child having offspring, marking the expansion of the family lineage to a new generation.

Secondary Sexual Characteristics

Secondary Sexual Characteristics are features that appear during puberty in humans and distinguish the two sexes from each other but are not directly involved in reproduction.