To Ensure That a Borrower Is Not Using Short-Term Bank

question 137

True/False

To ensure that a borrower is not using short-term bank credit to finance a part of its permanent needs for funds,banks often require borrowers to clean up their short-term loans for a 30-45 day period during the year.

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Definitions:

Zero Correlation

A statistical term indicating no linear relationship between two variables, meaning one variable does not predict the movement of the other.

Equity Tranche

The portion of a structured finance instrument that is first to absorb losses and last to receive payments.

Default

Failure to fulfill a legal obligation, especially failure to meet a debt payment or not fulfilling a contract condition.

Collateralized Debt Obligation

A complex structured finance product that pools together cash flow-generating assets and repackages them into tranches for sale to investors.