Collateral does not reduce the risk of a loan per se, because A. it is not part of the loan agreement B. the risk of a loan is determined by the borrower’s willingness and ability to repay the loan C. it may be worth less than the bank thinks D. the bank may not have title to the collateral

Collateral does not reduce the risk of a loan per se, because A. it is not part of the loan agreement B. the risk of a loan is determined by the borrower’s willingness and ability to repay the loan C. it may be worth less than the bank thinks D. the bank may not have title to the collateral

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter18: Acquiring Capital For Growth And Development

Section18.2: Long-term Debt Financing

Problem 2AYU

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Question

Collateral does not reduce the risk of a loan per se, because
A. it is not part of the loan agreement
B. the risk of a loan is determined by the borrower’s willingness and ability to repay the loan
C. it may be worth less than the bank thinks
D. the bank may not have title to the collateral

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