When a Loan Is Secured by Receivables, the Firm Assigns

question 28

True/False

When a loan is secured by receivables, the firm assigns the receivables to the bank. If the firm fails to repay the loan, the bank can collect the receivables from the firm's customers and use the cash to pay off the debt. The risk of default on the receivables is now borne by the bank.

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Definitions:

Major Organic

Pertains to the primary or most significant carbon-containing compounds or molecules studied within organic chemistry.

Reaction Mechanism

The step-by-step sequence of elementary reactions by which an overall chemical change occurs, detailing the molecular level changes.

Carboxylic Acid

Organic molecules that feature a carboxyl group (-COOH) are known for their acidic characteristics and are commonly found throughout the natural world.

Aldehyde

Organic compounds characterized by a carbon atom bonded to a hydrogen atom and double-bonded to an oxygen atom at the end of a carbon chain.