Answered: Banks may deny creditworthy borrowers…

Banks may deny creditworthy borrowers loan requests if a. they are non-corporate entities b. they are on late on paying taxes c. the loan is too risky d. they are individuals

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: For purposes of Graham, Leach Bliley, financial institutions can include banks and insurance…

A: Gramm Leach Bliley Act states that all financial institutions should disclose all the information to…

Q: Which of the following statements is false? A. Moral hazard is the lack of incentive to guard…

A: Analysis of the options: A: Moral hazard is the lack of incentive to guard against risk where one…

Q: As a result of the recent mortgage crisis, many banks reported record losses to their mortgage…

A: 1.

Q: Which of the following statements is incorrect? A bank providing a loan to the entity is not a…

A: D) An entity needs to disclose if it has a common director with another entity because there might…

Q: business

A: Company will windup at the end when borrowing are excessive and at that time all the assets and…

Q: What If the Facts Were Different? Suppose that West Bank’s Deposit Account Agreement had not…

A: INTRODUCTION: An obligation is a promise to pay a third party based on an underlying contract, such…

Q: Unsecured creditors: have rights to be paid amounts owed, but the rights may have to be enforced…

A: Correct option is 1. i.e unsecured creditors have rights to be paid amounts owed, but the rights may…

Q: what is ADVANTAGES AND DISADVANTAGES OF THIS MORATORIUM in banking to BANKS . Give an example

A: MORATORIUM- is an option available to borrower to defer the EMI payment. During the moratorium…

Q: What are the possible arguments for setting up a firewall between investment banks and commercial…

A: At the time, improper banking activity–the overzealous commercial bank involvement in stock market…

Q: Bank Muscat advances secured and unsecured loans to their customers. If Bank Muscat is issuing…

A: Secured loans are the loans which provided to borrower after taking collateral security. Unsecured…

Q: A bank owes an implied duty to its customers not to divulge information about its customers to third…

A: The duty of confidentiality is used to oblige the solicitor with regard to the confidentiality of a…

Q: True or False (Correct the wrong answer) 1) Deposits are considered as assets in the bank’s balance…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Many types of debt including auto loans, student loans and credit debt are securitized. The…

A: Securitization is the procedure where an issuer designs a marketable financial instruments by…

Q: Which situation is generally a consequence of overly lenient loan repayment terms A. The borrower…

A: The general consequence of overly lenient loan repayment terms will be:Answer: Option C, The…

Q: If households and businesses lend their surplus cash directly to borrowers, there would be no need…

A: Solution: Financial institution facilitates the flow of funds between the individuals and or the…

Q: Overdrafts are a result of a. loans made against certificates of deposit b. banks paying wire…

A: Very easy and low cost convenient way of getting loan are draft loans.

Q: Which of the following is not a reason for banks to be regulated? a.To protect depositors. b.To…

A: A bank is a type of financial institution that handles all procedures linked to depositing and…

Q: How can bankers be spotting potential fraud among the loan granted

A: Bank loan means the loan given by the bank to the borrower. This loan can be provided for short term…

Q: Identify which one of the following is a meaning of the term Bankrupt: a. A person or company is…

A: Bankruptcy involves legal proceedings of a business when the business is unable to service its debt.

Q: Consumer credit laws have been implemented over the years to protect consumers against creditor…

A: The objective of the question is to identify the correct consumer credit law that governs the…

Q: Moral hazard caused by Deposit Insurance Schemes refers to: Question 2Answer a. The placing of…

A: The objective of the question is to understand the concept of 'Moral Hazard' in the context of…

Q: Suppose a bank offered to make loans to potential borrowers without checking their credit history.…

A: The banks generate their income mainly from the difference between the lending rate and the rate…

Q: Why should you and should not sign a personal guarantee for a business loan?

A: The personal guarantee for a business loan refers to the assurance by the company or a business…

Q: A bank is insolvent if Group of answer choices its assets are less than its liabilities. it is…

A: Accounting insolvency happens when the value of a company's debts is more than the value of its…

Q: Increased compliance and regulatory requirements have no impact on a Bank's noninterest expense…

A: Bank's noninterest expense, also referred to as operating expenses, are the costs associated with…

Q: If a small business fails to repay a bank loan, what will the lending institution do to recover its…

A: It is a case where the business is unable to repay its loan and the lending institution is…

Q: properly defaults and is under liquidation, can the creditors of the bank touch and receive the…

A: Answer: Concept: When the liquidation occurs in bank, there is preferential payment that are to be…

Q: In other words, if you borrow $100, you must pay back $117.55 two weeks later. If you can’t pay…

A: Payday loans are a type of short-term loan that typically need to be repaid on the borrower's next…

Q: 10) Off-balance sheet activities involving guarantees of securities and back-up credit lines A) have…

A: Financial transactions and agreements that are not shown on a bank's balance sheet but may…

Q: A commercial bank in Barbados faces serious liquidity problems; however, they have an asset that has…

A: Liquidity risk refers to the risk which shows the inability for meeting the obligations of…

Q: hich one is not an incentive for a bank to Securitize its mortgage loans? A) Reduce insurance…

A: The objective of the question is to identify which among the given options is not a reason for a…

Q: refers to the possibility that the debtors supported by bank credit are unable or unwilling to repay…

A: Commercial banks are providers of funds and financing to their customers who are in need of funds.…

Q: Does the sale of accounts receivable to generate immediate cash harm or mislead anyone? Would you…

A: Answer: Selling of accounts receivable to generate cash is defined under a process called factoring.…

Q: Discuss the best reason(s) for using the allowance method and give some examples of companies that…

A: The reasons for using the Allowance method are discussed hereunder : There are two methods to…

Q: Except for those who actually are planning to commit fraud, every borrower who ever applied to a…

A: The loans and advances given to bank’s customer will comprise the bank’s asset. When the returns or…

Q: When banks allowed the business to withdraw money even when the account has no funds is known as…

A: Sometimes, banks provides a service to its clients to withdraw more than what they have in their…

Q: 2) To reduce moral hazard problems, banks include restrictive covenants in loan contracts. In order…

A: To address the moral hazard problems associated with lending, banks often include restrictive…

Q: Identify which one of the following statement is not correct? a. The credit limit under the facility…

A: A cash credit is a line of credit lent against the asset and liabilities, credit worthiness etc. The…

Q: Bank regulation cannot eliminate risk and does not prevent bank failure. It cannot guarantee that…

A: Bank regulation is an important part of the financial system that helps to protect the public from…

Q: on the basis of your knoledge in finance and banking what is the main reason for the criminalisation…

A: Dud Cheque It is the Cheque that could not be paid as a person who wrote the cheque has no money or…

Q: s decreasing provisions for bad debts and loan a good recommendation for a bank

A: Loan loss provisions enable banks to recognize an estimated loss from a particular loan portfolio in…

Q: Distinguish between illiquidity and insolvency as it affects a bank and discuss the reasons why…

A: Here are the two terms meanings, Illiquidity is considered as the short term problem of banks where…

Q: Which of the following transactions leaves a bank's total asset and liability unchanged? A bank…

A: Bank Liability: The liability of a bank refers to the amount borrowed by one bank from another bank…

Question

Banks may deny creditworthy borrowers loan requests if

they are non-corporate entities

they are on late on paying taxes

the loan is too risky

they are individuals

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The Federal Reserve banks accept deposits from individuals and banks. True or False True False
How can a company expand itself out of business, and how can a finance management prevent this from happening?
Why some banks have failed in their jurisdiction?
Which of the following statements is not correct?(1) Bank charges are not zero-rated item.(2) Input VAT is claimable on bank charges.(3) Bank charges are not exempt supply.(4) Input VAT is not claimable on bank charges.(5) Finance costs are exempt supply.
Which of the following would be considered reasons for mortgage fraud? Select all that apply. Responses overstated your income overstated your income understated your debts understated your debts lied about apartment rental lied about apartment rental lied about employment lied about employment
One example of moral hazard in finance industry is "insurance policies often decreases incentive to take care of possession of its customers". How should people mitigate this problem?
When loans are obtained from the bank or lending institutions, the accounts receivable may be pledged as collateral security for the payment of the loans requiring no entry nor disclosure with respect to pledged accounts in the books of the borrower TRUE OR FALSE
When a lender refuses to make a loan, although borrowers are willing to pay the stated interest rate or even a higher rate, the bank is said to engage in strategic holding out. collusive behavior. coercive bargaining. credit rationing.
8 What is the function of Deposit Insurance Corporation? Select one: It does not give guarantee for a loan taken by insured bank. It eliminates competition between commercial banks. It keeps records of malpractices in the form of fraud, forgeries or outright theft committed by financial officers of insured banks or other financial institutions & publish them. It keeps the deposit from the insurance companies.
eceivables arise due to a deferred sale, and companies are often unable to collect all their debts, which means that part of those debts may become non-existent or there is doubt about the possibility of collection. 1- What is the difference between bad debts and doubtful debts? 2- Draft an example (supported by numbers) to explain the method of doubtful debts in dealing with bad debts, provided that the explanation includes accounting restrictions and the impact on the financial statements? 3- Explain why the use of the direct method (bad debt method) conflicts with generally accepted accounting principles? 4- One of the methods for estimating doubtful debts is the deferred sales method, the receivables balance method, and the receivables aging method. Required: Formulate an example (enhanced by numbers) to explain the method of aging receivables in estimating doubtful debts, taking into account the following: (1) the number of clients should be 10 clients, (2) the percentages…
To minimize systemic risk in the banking system, which prudential measure has been put in place in the General Banking Law and the Manual of Regulations for Banks to safeguard them from too large a risk exposure to a particular borrower or corporate group?* Reserves Single Borrower's Limit DOSRI (directors, officers, stockholders and their related interests) Limit Equity Investment Limit Loan Loss provisioning
The following is true of deposit insurance, except a Depositor no longer has incentives to monitor the activities of the bank b Moral hazard dissuades the bank manager from taking risky projects c In theory, regulators have replaced depositors in the monitoring of banks d Moral hazard encourages the bank manager to take on risky projects