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Potential borrowers prior to making loan decision

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Reference no: EM133227652

Question 1. Which of the following is not an advantage of using financial ratios to analyse potential borrowers prior to making a loan decision?

a. They are subject to manipulation by accountants.

b. They allow trend analysis of the financial performance of the firm.

c. They provide a financial picture of the firm.

d. They allow an insight into the security the firm has available as collateral.

Question 2. When assessing the character of a prospective personal borrower, a loan officer would consider:

a. The current state of the industry cycle.

b. The personal assets of the borrower.

c. The amount the borrower is contributing to the purchase of the assets.

d. The personal financial and credit history of the borrower.

Question 3. Open-ended bridging finance:

a. Is the lowest risk type of bridging finance.

b. Involves the purchase of an asset with funds from a loan, with that loan to be repaid from the sale of a different asset, and the sale of that asset is currently uncertain.

c. Has well-defined cash flows to deal with different timings between the sale and purchase of an asset.

d. Involves the purchase of an asset with fund from a loan, with that loan to be repaid from the sale of a different asset, and a contact for the sale of that asset has been signed.

Reference no: EM133227652

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