Assuming That a Credit Decision Has Been Analyzed and Credit

question 2

Multiple Choice

Assuming that a credit decision has been analyzed and credit refused due to a negative expected profit,which of the following changes,if of sufficient magnitude,might change the decision to one of approval?

• A) Increase the percentage of profit margin.
• B) Decrease the probability of payment.
• C) Increase the discount rate.
• D) Reduce the expected profit.

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Definitions:

Combined Equivalent

A combined measure or assessment that brings together several different factors or values into a single, comprehensive figure.

Scheduled Payments

Periodic payments made by a borrower to a lender under the terms of a loan.

Compounded Monthly

The process of applying interest to an initial sum and the accumulated interest over time on a monthly basis.

Final Payment

The final payment is the last installment paid in a payment schedule, settling the remaining balance of a financial obligation.