Credit scoring is a process used to   Multiple Choice   determine what interest rate to charge a borrower, based on risk considerations.   determine the amortization period for a term loan, based on risk considerations.   calculate a borrower's return on equity.   calculate a borrower's leverage position.

Q: Explain the term Wraparound Loans?

A: Wraparound Loans:Wraparound Loans are also called as wrap. It is a type of mortgage loan.It allows a…

Q: If a firm is interested in the current cost of its debt obligations, then it can simply look at the…

A: Cost on debt can be considered after deducting tax expenses. Cost of debt is eligible for tax…

Q: What is the first step in calculating the lender's effective yield and calculating the borrower's…

A: Amortization schedule refers to the statement showing the details of the loan amount, interest…

Q: Among the factors considered in the quantitative models of default risk: a. Business cycle b.…

A: Business cycle is defined as an economic cycle that is linked with fluctuation of the GDP in its…

Q: the lending operation, how many types of loans security?

A: In lending operations banks for their safety of loans ask  for some collateral.You have to provide…

Q: Explain in general terms how the portions of loan payments going to principal and interest change…

A: Installment loans gradually pay down the loan principal while the payments remain the same .…

Q: the final or future value of an investment the compounding periods of a loan or investment the value…

A: The final or future value of an investment is called amount. The compounding periods of a loan or…

Q: How can the effect of below-market-rate loans on value be determined using investor criteria?

A: Below market interest loan is the loan on which interest rate is charged less than the current…

Q: ate one (1) problem situation concerning a loan amortization problem. Make a brief description of…

A: We need to create a loan amortization table for any practical situation.

Q: Give and explain the factors that affect the interest rate on the loan

A: Following are the factors that affect interest rate on the loan:  1. Supply and Demand Interest…

Q: nterest is a method of calculating the interest to be paid on a loan by combining the principal…

A: Add on interest refers to the method which is used when the person acquire the loan or the mortgage…

Q: State the advantages of long-term debt financing.

A: Long Term Debt Financing: It refers to the debt financing required by the firm which usually has a…

Q: Which is not a metric used by lenders to measure the overall suitability of a loan: 1) Loan to…

A: Loan to value ratio- It is a measure of indebtedness which divides the outstanding debt by the…

Q: How does a bank try to achieve the best possible risk adjusted return on its overall loan portfolio?

A: The possibility of a loss arising from a borrower's inability to repay a loan or meet legally…

Q: difference between l

A: Loan Review: A vital component of Effective Portfolio Risk Management. Effective loan portfolio…

Q: Explain the valuation of present value of long-term notes receivable. NOTE: Present your own…

A: solution Explain the valuation of present value of long-term notes receivable. Long term receivable…

Q: Explain the difference between each of the following pairs of terms. For each you must include an…

A: a)Common Difference is the difference between the Term and the term that follows it  The ratio is…

Q: How Interest Rates Affect Bond Prices. Explain the impact of a decline in interest rates on an…

A: Bond prices are dependent on interest rate in the market and prices goes up and down depending on…

Q: What is the difference between a line of credit and a short-term loan?

A: Short term loan:   A loan is borrowed money that is to be paid back along with the interest. A…

Q: Compare and contrast the lenders financial ratios and for what purpose they use the ratios

A: Financial ratios refer to the relative magnitude of the selected values measured in numerical that…

Q: What are the four categories of collateral value for secured loans?How does each affect credit risk?

A: Real property (e.g., land, buildings) Tangible personal property (e.g., equipment, vehicles)…

Q: List and explain the types of financial ratios in lending.

A: Financial Ratios: Financial ratios are the ratios calculated on the basis of financial statements…

Q: Which of the following type of loan is best used for temporary shortfalls of income? a. Secured…

A: Loans can be short term loans or long term loans

Q: What ratios are likely to be of greatest interest to the banker or trade creditor? To the…

A: The objective of the question is to identify the financial ratios that are of greatest interest to a…

Q: what basic criteria are commonly used in evaluating credit risk?

A: Credit risk is the risk of facing a loss due to a counterpart's failure to repay the debt in part or…

Q: w do yo

A: Introduction : A credit history can be understood as a history of a debtor's timely debt repayments.…

Q: Using balance sheet information, the ____ ratio indicates your ability to meet current debt…

A: Balance sheet is a statements which gives amount of assets and liabilities at a point of time.

Q: Explain how mortgage-backed securities, collateralised debt obligations and credit default swaps are…

A: Mortgage backed securities: Mortgage is a loan secured by some real estate property or commericial…

Q: (a) Explain the main elements involved in the structuring of a credit facility. (b) Explain the…

A: A credit facility is a method of pooling debt obligations and then redistributing the associated…

Q: Other elements being constant, the increase in an “interest receivable” account will lead to the…

A: Interest Receivable is a form of current asset owned by the company. It means interest that has been…

Q: When a lender looks at your FICO credit score to decide whether to lend to you, which of the "Five…

A: When a lender looks at your FICO credit score to decide whether to lend to you, he is considering…

Q: Discuss the steps of loan structuring.

A: Loan structuring is defined as the components, which used to make the loan, like term loan, rate of…

Q: What are factors that affect the expected rate of return for holders of debt and equity?

A: The expected return is the return which the investors expect to receive in return from their…

Q: Which of the following is a Long Term Source of Finance? a. Customer Advances b. Equity Shares c.…

A: Financial instruments are instruments that have some monetary value and are created due to the…

Q: When one examines a REIT investment, why it is important to consider the terms of the company’s…

A: REIT stands for Real Estate Investment Trust. It manages and operates properties that generate gain…