Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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When assessing the creditworthiness of new entrepreneurs, lending institutions review the “Five C’s”. The guarantees, or additional forms of security (such as assets) the entrepreneur can provide the lender is known as? *
conditions
capacity
collateral
capital
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- Which statement best describes the role of a credit agency? OIt tracks the use of credit for lenders. It predicts future earning potential for lenders. OIt teaches how to make smart financial decisions. OIt shows how saving money makes financial sense.arrow_forwardCarambola de Honduras. Slinger Wayne, a U.S.-based private equity firm, is trying to determine what it should pay for a tool manufacturing firm in Honduras named Carambola. Slinger Wayne estimates that Carambola will generate a free cash flow of 14 million Honduran lempiras (Lp) next year (2022), and that this free cash flow will continue to grow at a constant rate of 9.0% per annum indefinitely. A private equity firm like Slinger Wayne, however, is not interested in owning a company for long, and plans to sell Carambola at the end of three years for approximately 10 times Carambola's free cash flow in that year. The current spot exchange rate is Lp23.72 = $1.00, but the Honduran inflation rate is expected to remain at a relatively high rate of 16.5% per annum compared to the U.S. dollar inflation rate of only 3.5% per annum. Slinger Wayne expects to earn at least a 20% annual rate of return on international investments like Carambola. a. What is Carambola worth if the Honduran lempira…arrow_forwardQUESTION 1 Which if the following is not true of the 5Cs in evaluating credit quality Character refers to the integrity and honesty of the borrower and applies to both individuals and companies Capital refers to the savings or wealth of the borrower as an additional source of income to repay the loan Collateral refers to assets that are pledged to lender Capacity refer to external factors including the state of economy that can impact the borrower’s source of income. QUESTION 2 Which of the following is not true? Firm A Firm B Industry Benchmark 2018 2019 2020 2018 2019 2020 2018 2019 2020 ROA 9.14% 9.50% 9.90% 8.11% 8.16% 8.19% 8.11% 8.14% 8.15% ROE 22.45% 22.95% 23.45% 19.65% 19.88% 20.12% 19.95% 20.55% 21.00% TIE 1.75 1.65 1.55 2.75 2.90 3.05 2.25 2.30 2.50 CR 3.25 3.66 3.75 2.55 2.65 2.75 2.40 1.45 2.50 EPS…arrow_forward
- hgjhfgfrrrrrarrow_forwardThis type of financing involves a syndicate of financial institutions to provide debt financing. SEO Shelf registration Private placement Securitization Syndicated loans Project financingarrow_forwardDiscuss the major factors that a lender should take into account when deciding whether to grant a long-term loan to the business.arrow_forward
- How do you calculate the rate on an Adjustable Rate Mortgage? Survey the cost of funds an local banks. O Use the amortization formula. With a financial calculator. O Index + Marginarrow_forwardLoan Servicing Companies.. O Collects monthly payments, remits to investor O Purchase loans on the secondary market O Decide on credit criteria for new loans O Underwrite home loansarrow_forwardQuestion 34 of 50: Select the best answer for the question. 34. Which of the following would a lender most likely use to determine whether a firm could make its current loan payments? O A. Asset management ratios O B. Liquidity ratios OC. Profitability ratios OD. Market value ratios Mark for review (Will be highlighted on the review page)arrow_forward
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