Which of the Following Credit Decisions Appears Correct for a Customer

question 50

Multiple Choice

Which of the following credit decisions appears correct for a customer who intends to order $1,000 of goods annually that have a 20% profit margin if the probability of default is 20% and the discount rate is 10%?

• A) Reject because expected loss equals $320
• B) Reject because expected profit equals $0
• C) Accept because expected profit equals $1,440
• D) Accept because expected profit equals $3,200

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Definitions:

Process Behaviors

Actions and conducts that contribute to the ongoing operations and methodologies within an organization or project.

Relationship Behaviors

Actions taken by individuals in leadership roles that help to establish and maintain positive interactions and connections with others.

Directing Behaviors

Actions by a leader to guide, instruct, and oversee the performance of team members.

Leadership Behavior

Involves the actions, practices, and attitudes leaders use to influence their team's performance, motivation, and engagement.