A Firm Has Borrowed $1 Million and Assigned Its Receivables

question 3

Multiple Choice

A firm has borrowed $1 million and assigned its receivables to the lender.Because of defaults, the receivables prove insufficient to cover the debt.In this case, the:

• A)Lender bears the risk of default
• B)Firm bears the risk of default
• C)Default risk is shared between lender and firm
• D)Insurance carrier will bear the risk

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Definitions:

James-Lange Theory

A theory of emotion suggesting that emotions occur as a result of physiological reactions to events.

Physiological Determinants

Biological factors that influence the functioning of an organism, affecting physical health and behavior.

Emotional Experience

The subjective feeling associated with a state or reaction that involves a complex psychological and physiological response to a particular situation.

Autonomic Activation

The process involving the autonomic nervous system, which controls involuntary bodily functions and responses, such as heart rate and digestion.