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.

---

Definitions:

Public Assistance

Government programs designed to provide financial aid or services to individuals or families in need, often based on income criteria.

Food Stamps

Government-issued vouchers that can be used to purchase groceries at retail stores, intended to help low-income families afford food.

Poor

Lacking sufficient money to live at a standard considered comfortable or normal in a society.

Female-Headed Households

Households that are led by a female as the primary decision-maker or head of the household.