HLT Loans Typically Have All of the Following Characteristics Except

question 92

Multiple Choice

HLT loans typically have all of the following characteristics except which of the following?

• A)They have a short maturity of less than three months.
• B)They are secured by assets of the borrowing firm.
• C)They have floating rates tied to LIBOR or some other short-term index.
• D)They have strong covenant protection.

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Definitions:

NPV

Net Present Value; a calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate.

WACC (Weighted Average Cost of Capital)

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, including equity and debt.

IRR (Internal Rate of Return)

The rate of return that brings the total net present value of all cash flows from a given project to zero.

Independent Project

A project whose cash flows are not influenced by the acceptance or non-acceptance of other projects, allowing it to be evaluated on its own merits.