In the United States,national Banks Cannot Extend an Unsecured Loan

question 33

Multiple Choice

In the United States,national banks cannot extend an unsecured loan to a single borrower that exceeds _____________ of the bank's capital and surplus.

• A)25 percent
• B)10 percent
• C)15 percent
• D)20 percent
• E)None of the options is correct

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Definitions:

Times Interest Earned

A ratio that measures a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes by the interest expense.

Debt-To-Equity Ratio

A financial ratio indicating the relative proportion of shareholder's equity and debt used to finance a company's assets.

Equity Multiplier

A financial leverage ratio that measures the portion of a company`s assets that are financed by its shareholders' equity.

Price-Earnings Ratio

A valuation ratio comparing a company’s current share price to its per-share earnings, helping investors evaluate if a stock is over or under-valued.