Which of the Following Is NOT a Factor That May

question 74

Multiple Choice

Which of the following is NOT a factor that may tend to increase loan sales in the future?

• A)There is an increased trend to apply credit ratings to loans offered for sale,increasing the attractiveness to secondary market purchasers.
• B)The federal government takeover of Fannie Mae and Freddie Mac means that the loans held by these agencies can never be sold to other entities.
• C)Because of their special credit monitoring skills,FIs have a comparative advantage in making loans to below-investment grade companies and then selling the loan.
• D)The trend toward marked-to-market accounting for assets makes bank loans more like securities so they may be easier to sell.

---

Definitions:

Carrying Costs

The total cost of holding inventory, including storage, insurance, depreciation, and opportunity costs.

Storage Costs

Expenses incurred for storing goods, which may include warehousing, refrigeration, insurance, and security expenses.

Pro-forma Cash Flow

An estimate of future cash inflows and outflows of a company, usually projecting future financial performance.

Income Statement

A financial statement that shows a company’s revenues, expenses, and profits over a specific period, typically a quarter or year.