Lenders Recognize That by Having an Interest in Collateral They

question 150

Multiple Choice

Lenders recognize that by having an interest in collateral they can reduce losses if the borrowing firm defaults,

• A) and the presence of collateral reduces the risk of default.
• B) but the presence of collateral has no impact on the risk of default.
• C) therefore lenders prefer to lend to customers from whom they are able to require collateral.
• D) therefore lenders will impose a higher interest rate on unsecured short-term borrowing.

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Definitions:

Trans-1,4-Dipropylcyclohexane

A chemical compound featuring a cyclohexane ring with propyl groups attached at the 1 and 4 positions in a trans configuration.

Stable Conformation

The spatial arrangement of atoms in a molecule that is energetically favorable and has lower internal strain.

Cis-1,4-Dipropylcyclohexane

A cyclohexane derivative where two propyl groups are positioned on the same side of the cyclohexane ring at the 1st and 4th positions.

Stable Conformation

A molecular arrangement that is in a low energy state, making it less reactive and more resistant to changes.