PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 23, Problem 13PS
Summary Introduction
To determine: The common problems for a credit scoring system.
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Students have asked these similar questions
Why do we need to check the credit worthiness of credit customers before granting their credit application?
Which one of the following best defines the term credit scoring?
A.
Categorizing customers into groups depending on the length of time it takes each customer to pay for purchases
B.
Compiling a list of accounts receivable segregated by the length of time each receivable has been outstanding
C.
Evaluating the opportunity costs of a credit policy
D.
Process of quantifying the probability of default when granting credit to customers
E.
Tracking of both the number and the size of customer orders over a period of time
Consumers should comparison shop for credit just as they would for any other consumer good or service. How might a consumer's stage of the financial life cycle, income, net worth, or credit score affect the availability of loan sources and the associated cost of the loans offered?
Question content area bottom
Part 1
Which of the following statements is correct? (Select best answer below.)
A.
Typically, stages of the financial life cycle, income, and net worth move inversely with credit score, and the cost of the loans tends to be lower in early financial life cycle stages due to a sufficient supply of fund sources.
B.
Typically, stages of the financial life cycle, income, net worth and your credit score move in unison, and the cost of the loans tends to be lower in early financial life cycle stages due to a sufficient supply of fund sources.
C.
Typically, stages of the financial life cycle, income, net worth and your credit score…
Chapter 23 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 23 - Expected yield You own a 5% bond maturing in two...Ch. 23 - Bond ratings In February 2018, Aaa bonds yielded...Ch. 23 - Bond ratings It is 2030 and the yields on...Ch. 23 - Prob. 4PSCh. 23 - Default option Other things equal, would you...Ch. 23 - Prob. 6PSCh. 23 - Prob. 7PSCh. 23 - Default option Digital Organics has 10 million...Ch. 23 - Prob. 9PSCh. 23 - Prob. 10PS
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- 1. How do banks use your credit reports? Sight an example to illustrate the answer. 2. How can you have a good credit history?arrow_forwardDetermine the decision nature of each of the following issues: Will we purchase on credit or will we borrow in the short term and pay cash?arrow_forwardWhat can you do to build and maintain your credit rating? Why is this important?arrow_forward
- Which of the following would result in a soft credit inquiry? mortgage loan application O background check for employment credit card application car loan applicationarrow_forwardExplain whati mportant information we can get from each sources of credit information to be able to make a decision whether or not we can extend credit to the loan applicant.arrow_forwardWhich 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_forward
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