In Making Credit Decisions, Which of the Following Items Is

question 52

Multiple Choice

In making credit decisions, which of the following items is considered a market-specific factor?

• A)Whether the reputation of the borrower enhances the credit application.
• B)Whether the current debt-equity ratio is sufficiently low to not impact the probability of repayment.
• C)Whether the debt can be secured by specific property.
• D)Whether the position of the economy in the business cycle phase would affect the probability of borrower default.
• E)Whether the volatility of earnings could present a period where the periodic payment of interest and principal would be at risk.

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Definitions:

Thinking Tasks

Activities or challenges that require intellectual effort and cognitive processing to solve problems or make decisions.

Performance

The act of carrying out a task or function, often evaluated in terms of effectiveness, efficiency, or skill.

Creative Insights

Sudden realizations or understanding that provide unique problem-solving ideas.

Incubation

Incubation is the process of maintaining controlled environmental conditions to facilitate the development of embryos or the growth of microorganisms.