11-69 in Making Credit Decisions,the Following Item Is Considered a Market-Specific

question 33

Multiple Choice

11-69 In making credit decisions,the following item is considered a market-specific factor.

• A)Whether the borrower's capital structure is beyond the point where additional debt increases the probability of loss of principal or interest.
• B)Whether the relative level of interest rates will encourage the borrower to take excessive risks.
• C)Whether property can be pledged as collateral.
• D)Whether the volatility of earnings could present a period where the periodic payment of interest and principal would be at risk.
• E)Whether the record of the borrower is sufficient to create an implicit contract.

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Definitions:

Consumer Product Safety Commission

A U.S. government agency responsible for protecting the public from risks of injury or death from consumer products.

Mandatory Standards

Regulations or requirements that specify minimum acceptable levels for the safety, performance, or reliability of products, services, or practices.

Product Recall

The process of retrieving and replacing defective goods for consumers, typically initiated by the manufacturer or distributor when a safety or quality issue is identified.

Reasonable Basis

A legally justified reason for taking a particular action, often used in tax and legal contexts to demonstrate that decisions were made with adequate grounds.