Which of the Following Is NOT a Key Characteristic of Loans

question 15

Multiple Choice

Which of the following is NOT a key characteristic of loans sold in the short-term loan sale market?

• A)Issued as a secured loan.
• B)Loans to investment grade borrowers or better.
• C)Issued with a fixed rate.
• D)Sold in units of $1 million and up.

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Definitions:

Default Risk

The risk that a borrower will not make the required payments on their debt obligations, leading to potential losses for lenders or investors.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, often represented by the yield on government securities.

Inflation Premium

The additional amount investors require on the return of an investment to compensate for the loss of purchasing power due to inflation.

Treasury Bill

Short-term government securities issued at a discount from the face value and maturing at par.