A Penalty Provision Specifies a Certain Amount to Be Paid

question 30

True/False

A penalty provision specifies a certain amount to be paid in the event of a default or breach of contract.

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Definitions:

Low Collateral Value

Low collateral value refers to assets that have declined in worth, offering less security for loans and reducing borrowing capacity.

Credit Scoring

A system used by lenders to evaluate the creditworthiness of potential borrowers, resulting in a score that predicts the likelihood of repayment.

Probability of Default

The probability that a borrower will fail to fulfill their debt responsibilities.

Credit Policy

The guidelines a company follows to determine the amount and terms of credit to extend to customers.