Explain how an installment loan differs from revolving credit in terms of risk and the nature of the return to the lender.

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: The payment for the use of borrowed money is called: loan maturity value interest principal

A: Borrowed money is the loan taken, which is to be repaid within the terms of the loan contract.

Q: Define mortgage securitisation , with a relevent example?

A: Mortgage is a loan agreement between the borrower and the lender, in which the property or real…

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: what are two types of credit

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: From the standpoint of a borrower, is long-term or short-term credit riskier? Explain

A: credit risk is define as the chances of a loss due to  borrower's failure to repay obligation in…

Q: Credit scoring is a process used to   Multiple Choice   determine what interest rate to charge a…

A: Credit score : it is a number between 300 - 850 which depicts consumers creditworthiness.

Q: How does high interest rate and setting ceiling on loans (limited credit) compensate for the…

A: Rate of interest is selected as per the credit-score of the borrower compared to the range set by…

Q: A loan with compound interest always cost more than a loan with simple interest. True or false

A: Simple interest is the simplest form of calculation of interest in which interest is calculated on…

Q: What is defined as the interest on a load or principal that is based only on the original amount of…

A: The right answer is option (D) simple interest

Q: The actual amount that is given to the borrower is called the after the loan has been discounted.

A: Basically a discounted loan has three components Discount Proceeds Maturity Value

Q: What are the main differences between ARMs and FRMs loans? You need to highlight the differences in…

A: Loan which are provides to the borrower either in Adjusted Rate of Mortgage or Fixed Rate of…

Q: Repricing risk refers to:   Question 11 options:   Risk of a change to the maturity of a credit…

A: Repricing refers to any change in the interest rate because of change in maturity date or may be due…

Q: How does the cost of costly trade credit generally compare withthe cost of short-term bank loans?

A: Costly trade credit imply companies that make payments after the discount period as they forego the…

Q: Why might the market value of a loan differ from its outstanding balance?

A: Loan outstanding balance: The outstanding balance or loan balance is the remaining amount that is…

Q: What types of short-term credit are classified as accrued liabilities?

A: An accrued liability means the expense of the business incurred during a specific period but has yet…

Q: What is a compensating balance? What effect does a compensatingbalance requirement have on the…

A:

Q: what are two types of credit

A: "We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: Describe the concept of non interest bearing on loan.

A: A non-interest bearing loan is a debt for which there is no documented requirement for the borrower…

Q: What are the pros and cons of loaning?

A: Loaning is a process of lending money. An interest rate is charged by the lenders on the money lent…

Q: What is the main purpose of loan loss provisioning? Explain the concepts of incurred loss model and…

A: The loan loss provision is the cash reserve created by the banks for the future credit risk. The…

Q: The borrowing base used to guarantee collateral on an operating line of credit is highly dependent…

A: Borrowing base means the maximum amount that a borrower can borrow from a lender. Any excess of…

Q: The two main factors that determine the market interest rate on a loan or bond are: Length of time…

A: Market interest rate is the interest rate offered on a financial instrument in the financial market,…

Q: . Accounts receivable financing is the term used to describe which of the following types of loans…

A: In Accounts receivable financing companies make a collateral of its account receivables to get loan…

Q: In the PMT function, what is not true about the rate argument? Group of answer choices It assumes an…

A: Rate argument in PMT function is required and not optional and it assumes annual interest rate and…

Q: Substitute of term loan facility is O Financial guarantee O Performance guarantee O Personal…

A: Term loan is a loan which is given by a bank to the borrower for longer periods usually more than a…

Q: How does getting a secured loan using accounts receivableas collateral differ from factoring?

A: In factoring, the corporation sells their receivable balance to the factoring corporation at a…

Q: True or false. Rate of return is the interest earned on the unpaid balance of an amportized loan

A: Rate of return is calculated to ascertain the profit and loss of an investment. It is expressed in…

Q: How does the cost of costly trade credit generally compare with the cost of shorttermbank loans?

A: Trade credit is that the quantity businesses owe to their suppliers on inventory, products, and…

Q: Discuss the two theories of mortgage default. What are the most important factors that influence the…

A: Mortgage Default In simple term mortgage default which is described as default from the borrower to…

Q: A credit derivative allows creditors and debtors to _________ their exposure to credit risk. For…

A: A credit derivative is a financial contract that allows the parties to minimize their exposure to…