Which of the Following Is True Concerning Loans Sold with Recourse

question 15

Multiple Choice

Which of the following is true concerning loans sold with recourse?

• A)Most loans are sold with recourse.
• B)The buyer cannot put the loan back to the selling FI.
• C)The FI has no explicit liability if the loan eventually goes bad.
• D)The FI that originated the loan retains a contingent credit risk liability.
• E)The loan sale is technically removed from the balance sheet.

---

Definitions:

Over/Underabsorbed Overhead

The difference between the overhead costs applied to products and the actual overhead costs incurred.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, ending with net income or loss.

Cost Pool

A grouping of individual costs, typically by department or service center, from which cost allocations are made later.