25-58 Loan Assignments Make Up More Than 90 Percent of the U.S.domestic

question 19

Multiple Choice

25-58 Loan assignments make up more than 90 percent of the U.S.domestic loan sale market because

• A)they have lower capital requirements than other types of loan sales.
• B)they are riskier than are other types of loan sales.
• C)monitoring costs are reduced since all rights are transferred upon sale.
• D)regulators prefer these transactions to loan participations.
• E)there is no secondary market in loan participations.

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Definitions:

Cost Of Goods Sold

Expenses directly related to the production of a company’s merchandise for sale, including the cost of labor and materials.

Raw Materials

The basic material from which a product is made, typically used in the manufacturing or production process.

Indirect Cost

Expenses not directly linked to the production of goods or services, such as rent, utilities, and administrative salaries.

Cost Object

Anything for which cost data are desired. Examples of cost objects are products, customers, jobs, and parts of the organization such as departments or divisions.