One Thing Lenders Sometimes Require When Loaning Money to a Small

question 65

Essay

One thing lenders sometimes require when loaning money to a small corporation is an assignment of the common stock as collateral on the loan. Then,if the business fails to repay its loan,the ownership of the stock certificates can be transferred directly to the lender. Why might a lender want such an assignment?
What advantage of the corporate form of organization comes into play here?

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Definitions:

High Self-monitor

An individual who is highly attentive to societal cues and adapts their behavior accordingly to fit in different social situations.

Organizational Financial Performance

Measures how well a company utilizes its assets to generate earnings and manage its financial activities.

Personality Measures

Tools or assessments used to evaluate individual differences in personality traits and characteristics.

Organizational Commitment

The emotional and psychological attachment of an employee to their organization, influencing their willingness to continue working there.