11-70 Borrower Reputation Is Important in Assessing Credit Quality Because

question 25

Multiple Choice

11-70 Borrower reputation is important in assessing credit quality because

• A)good past payment performance perfectly predicts future behavior.
• B)preservation of a good customer/FI relationship acts as an additional incentive to encourage loan repayment.
• C)FIs only lend to customers they know.
• D)customers with poor credit histories always default on their loans.
• E)a reputation for honesty is important in credit appraisal.

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Definitions:

Personnel Costs

The expenses directly related to the hiring, training, and payment of employees.

Information Technology

The employment of computers, telecommunications, and various instruments for storing, accessing, sending, and altering information.

Process Costing

A costing method used for homogenous products, where costs are assigned to mass-produced items in continuous processes.

Equivalent Units

Equivalent units are a concept in cost accounting used to allocate costs to partially completed goods, adjusting for the stage of completion.