PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 24, Problem 22PS
Summary Introduction
To determine: The appropriate definition for the respective items.
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Students have asked these similar questions
Customer loans are classified on a Depository Institution (DI)'s balance sheet as
Select one:
A.
liabilities, because the customer may default on the loan.
B.
assets, because the DI earns servicing fees on the loan.
C.
assets, because the DI's major asset is its client base.
D.
assets, because DIs originate and monitor loan portfolios.
E.
liabilities, because the DI must transfer funds to the borrower at the initiation of the loan.
6. Open account credit provides a debtor with a predetermined line of credit and a
flexible payback period. Which of the following is an example of open account
credit?
i. Personal Loan
ii. Overdraft
i. Charge card
iv. Education loan
A. i and ii
B. i,i and ii
C. ii and ii
D. i,ii,i and iv
match the correct term for each of the following descriptions.
Descriptions
Terms
Examples of these instruments include trade credit, accruals, short-term bank loans, and commercial paper.
Accruals
A document that provides evidence of the existence of a debt, and specifies the terms of the loan transaction.
Blanket lien
The cost of accounts payable paid before the expiration of the discount period.
Commercial paper
This financial instrument uses a borrowing firm’s entire inventory of low-priced, fast selling, and fungible products to secure a short-term loan, and allows the borrower to sell items from inventory without the lender’s permission.
Commitment fee
A fee charged by a financial institution providing a guaranteed, or revolving, line of credit, on the unused balance of a revolving line of credit.
Discount interest loan
A form of unsecured short-term financing used by large, extremely creditworthy business organizations.
Factoring
A financial…
Chapter 24 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 24 - Bond terms Use Table 24.1 (but not the text) to...Ch. 24 - Bond terms Look at Table 24.1: a. The AMAT bond...Ch. 24 - Bond terms Select the most appropriate term from...Ch. 24 - Prob. 5PSCh. 24 - Bond terms Bond prices can fall either because of...Ch. 24 - Security and seniority a. As a senior bondholder,...Ch. 24 - Prob. 8PSCh. 24 - Prob. 9PSCh. 24 - Security and seniority a. Residential mortgages...Ch. 24 - Sinking funds For each of the following sinking...
Ch. 24 - Call provisions a. Look at Table 24.1. Suppose...Ch. 24 - Covenants Alpha Corp. is prohibited from issuing...Ch. 24 - Prob. 14PSCh. 24 - Private placements Explain the three principal...Ch. 24 - Convertible bonds True or false? a. Convertible...Ch. 24 - Convertible bonds Maple Aircraft has issued a 4%...Ch. 24 - Convertible bonds The Surplus Value Company had 10...Ch. 24 - Prob. 19PSCh. 24 - Convertible bonds Iota Microsystems 10%...Ch. 24 - Convertible bonds Zenco Inc. is financed by 3...Ch. 24 - Prob. 22PSCh. 24 - Prob. 23PSCh. 24 - Bank loans, commercial paper, and medium-term...Ch. 24 - Prob. 25PSCh. 24 - Tax benefits Dorlcote Milling has outstanding a 1...Ch. 24 - Convertible bonds This question illustrates that...Ch. 24 - Prob. 28PS
Knowledge Booster
Similar questions
- Loans backed by a simple promise to repay are known as _____ loans. open-end credit revolving credit securedu nsecuredarrow_forward. Accounts receivable financing is the term used to describe which of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivable? A. Secured short-term loan B. Unsecured short-term loan C. Secured long-term loan D. Unsecured long-term loan E. Trust receipt loanarrow_forwardwhich of the following source of finance comes with a line of credit ? a. Credit card b. Mutual Fund c. Commercial Paper d. Supplier creditarrow_forward
- Which of the following is money kept by the firm with a bank in low-interest or non-interest bearing accounts as part of the loan agreement? A - short-term financing B- secured loans C- compensating balance D- line of creditarrow_forwardWhen a lender looks at your FICO credit score to decide whether to lend to you, which of the "Five C's of Credit" is it considering? Capital Collateral Character Сарacityarrow_forwardBank Muscat advances secured and unsecured loans to their customers. If Bank Muscat is issuing secured loans, identify which one of the following is the reason for bank to issue secured loan? a. To increase interest on loans by the banks b. To sell the collateral in the event of non-refund of the loan c. To have long standing relationship with customer d. To reduce the loan amount and time periodarrow_forward
- Commercial loan agreements should contain which of the following: a. representations b. fees and charges c. means of repayment d. all of the above In order for the seller of securitized securities to remove the assets (i.e. mortgages) from the balance sheet, the sale must a. have a service agreement b. be overcollateralized c. be without recourse d. be made at a discount (original issue discount) Banks may deny creditworthy borrowers loan requests if a. they are non-corporate entities b. they are on late on paying taxes c. the loan is too risky d. they are individuals Chattel mortgages refer to a. a security agreement using corporate assets b. a security agreement using commercial equipment c. a security agreement using intangible property d. a security agreement using tangible personal propertyarrow_forwardWhich type of loan can seem to be funded by the mortgage broker when are not? a) A thrift institution loan Ob) A table-funded loan c) A credit union loan d) An FHA loanarrow_forwardWhich of the following is not a way in which banks lend short-term unsecured loans? Through credits cards lines with a certain credit limit Through a guaranteed credit line that has a commitment fee for any unused amount for the year By sending the amount earned from trust and investment products offered by the bank By lending a single date maturity loan to a debtorarrow_forward
- What are the 5 Cs of credit that are sometimes used by bankers and others to determine whether a potential loan will be repaid?arrow_forwardThis payment type is essentially a short term loan up to a predetermined amount. O Debit Card O Credit Card O Mobile Payment O Mobile Walletarrow_forward: Provide example of accounting treatment for transactions related to loan in two situations as following Personal loan Personal guarantees The accounting treatment include the payment of the loan and return the loan to the bank , interest rate , commissionarrow_forward
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