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.

---

Definitions:

Supreme Court

The highest federal court in the United States, with ultimate appellate jurisdiction over all federal and state court cases involving issues of federal law, plus original jurisdiction over a small range of cases.

Cambodia Invasion

Refers to the military incursion by the United States and South Vietnamese forces into Cambodia in 1970 during the Vietnam War, aimed at disrupting North Vietnamese supply lines.

Murderous Regime

A government or ruling body accused of engaging in or endorsing violence, often systemic, against its own people or those it controls.

New Federalism

A political philosophy and approach that seeks to shift some powers and responsibilities from the federal government back to the states, emphasizing a more decentralized system of governance.