16. What do you call for the likelihood of loss due to customers are not paying their amounts owing? a. Discount risk b. Credit risk c. Payment risk d. Loss risk
Q: What does default mean? Does it occur only when borrowers fail to make scheduled loan payments?
A: Default is the risk involved in providing the mortgage loan. Default indicates the incapability of…
Q: If, after collateral is repossessed and sold, there is money left over (a surplus), that money…
A: People raised funds from the financial institution and for that loan to be secured, financial…
Q: How the following risk can be mitigated and managed 1. Market risk 2. Liquidity risk 3. Insolvency…
A: Market risk is also known as systematic risk, that involves uncertainty with any investment…
Q: The cost of marginal bad debts is found by taking the difference between the levels of bad debts…
A: Bad debt refers to the loans or amount that can no longer be recovered as the person has lost all…
Q: Transaction risk happens when there is a default payment on the delivery date by one party, causing…
A: Transaction risk is the risk related with exchange rate fluctuations between agreement and…
Q: Where will we record when there is a decrease in liability? O a. Debit side O b. Credit side c. None…
A: According to the rules of accounting revenues, liabilities and equity are credited on increase and…
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: Which of the following methods may not be appropiate for estimating bad debt expense? a. percentage…
A: Bad debt expense means those accounts receivables that can not be collected. It depends on the…
Q: Credit risk is defined as the inability of _________to meet their debt obligations. For _______the…
A: risk management is a task that requires a huge amount of skill and development. for risk management,…
Q: Which of the following is NOT commonly regarded as being a credit policy variable? * Collection…
A: “Since you have asked multiple question, we will solve one question for you. If you want any…
Q: What are some different methods that can be used for customer returns/bad debt? which way do you…
A: Solution: The customer returns can be accounted through two method: One is directly debiting the…
Q: Which of the following type of loan is best used for temporary shortfalls of income? a. Secured…
A: Loans can be short term loans or long term loans
Q: 7. Which of the following accounts is an liability? a. Bank deposit b. Prepaid insurance expense c.…
A: Liability is an obligation for a business. It arises when anything is payable in future or any…
Q: QUESTIONS: 1. How much are the total free assets? 2 How much are the unsecured liabilities with…
A: The given question has more than 3 subparts so as per the policy of the company only the first 3…
Q: Explain the methods of estimating bad debts ?
A: Bad Debt: A loan or outstanding sum that is no longer considered collectable and must be wiped off…
Q: A ______________ factor of credit policy effects occurs when a firm which institutes a credit policy…
A: There are different variables related to the credit policy of a company. These variables are -…
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: How does the percent-of-sales method compute bad debts expense?
A: In percent of sales method, bad debt expenses are computed as a predetermined percentage of credit…
Q: What are some different methods that can be used for customer returns/bad debt?
A: Bad debts they are the expenses that are book by the company for the credit sales made by the…
Q: Excess of Debit side over Credit side is called?
A: Books of accounts contains various ledgers. And these ledgers contain various accounts. These…
Q: Accrual accounting requires estimates of future outcomes. For example, the reserve for bad debts is…
A: Financial Statements These are a company's financial activities and position in a nutshell. The data…
Q: A discounted note receivable is an example of a loss contingency? Is it true or false
A: This is a False.
Q: What is credit risk?
A: Risk is an uncertain outcome from a certain event. It arises when the possibility of result is…
Q: What are some of the ways to estimate bad debts?
A: There are 2 basic methods namely 1. Percentage of sales method 2. Percentage of receivable method…
Q: 13-when the least desirable credit risks are the ones most likely to seek loans, lenders are are…
A: Loans are the methods through which individuals or companies acquire the funds required by them from…
Q: Part III Discuss concisely each scenario in not less than 5 sentences. 41-45 Simple interest is a…
A: The benefits of being a borrower or a creditor are subject to the needs of the business and the…
Q: refers to the possibility that the debtors supported by bank credit are unable or unwilling to repay…
A: Commercial banks are providers of funds and financing to their customers who are in need of funds.…
Q: Explain how an installment loan differs from revolving credit in terms of risk and the nature of the…
A: Installment credit is a type of loan in which the borrower receives a defined, or limited, sum of…
Q: Hi why is the net income on the credit side and not debit?
A: Net Income - Net Income is the result of the revenue over expense incurred by the company. It will…
Q: Credit Analysis is about ..... i.Liquidity and solvency ii.Profitability iii.Risk Select one: a.…
A: Credit Analysis: Credit analysis measures a company's or entity's capacity to pay its commitments by…
Q: During a period of deflation in which liability account balance remains constant, which of the…
A: Monetary items refers to those assets and liabilities whose value can be measured and expressed in…
Q: Question 10 The general accounting standards for recognition and measurement of accounts receivable…
A: 1. As per IFRS, the accounts receivable is classified as financial asset. The financial asset is…
Q: When do you considered a loan, receivables are impaired?
A: Impairment refers to diminution in realizable value of the asset. It may be due to various factors…
Q: Risk mitigation tools used specifically by secured lenders are least likely to include detailed…
A: The question is based on the concept of credit assessment and credit risk management. The credit…
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: factoring, the lender buys accounts receivable outright from borrower at a discount and assumes…
A: Introduction: Factoring: Another name for factoring is receivables factoring. Buying the accounts…
Q: What is meant by bad debts recovery? Give two illustrative example.
A: Bad debt refers to loans or outstanding balances owed that are no recoverable and must be written…
Q: world, explain whether a current account deficit might be seen as a problem?
A: A current account deficit may imply the economy is becoming uncompetitive and the conversion scale…
Q: What is proovision for bad debts
A: Bad debt means the amount due from debtor but it become bad i.e. it is not possible to recover the…
Q: Question 5: Collateral is a valuable asset that is pledged to ensure loan payments. If you fail to…
A: Collateral is an asset which is pledged by the borrower to the lender to give a security to the…
Q: One possible cost of extending credit is called ______________.
A: Accounting: Accounting is the art of recording, classifying and summarizing in a significant…
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- Which of the following does not relate to credit risks? Select one: A. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations B. Credit risk also describes the risk that an insurance company will be able to pay a claim. C. It refers to the risk that a lender may not receive the owed principal and interest D. Credit risk describes the risk that a bond issuer may fail to make payment when requested E. Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loanWhich of the following does not relate to credit risks? a. Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loan b. It refers to the risk that a lender may not receive the owed principal and interest c. Credit risk also describes the risk that an insurance company will be able to pay a claim. d. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations e. Credit risk describes the risk that a bond issuer may fail to make payment when requestedThe purpose of the inflation premium is to maintain the purchasing power of money while it is loaned to someone else. TTrueFFalse What kind of problem bad credit risks people pose to financial intermediaries ? AMoral hazard BNone of the above CAdverse Selection DFree-riding
- 5) Systemic risk is a) credit risk. b) an insurance contract against the default of one or more borrowers. c) firm-specific risk. d) default risk. e) the potential breakdown of the financial system when problems in one market spill over and disrupt others.How the following risk can be mitigated and managed 1. Market risk 2. Liquidity risk 3. Insolvency risk 4. Credit riskHow to define credit risk and how to limit that risk.
- Risk premium is also called A• Risk addictive B• Credit spread C• Debt spread D• Risk spread5.-The cost of marginal bad debts is found by taking the difference between the levels of bad debts before and after the proposed relaxation of credit standards. True or false?Credit risk is defined as the inability of _________to meet their debt obligations. For _______the risk includes_____ of principal and interest, cash flow ________, and_________collection costs. Thus, higher credit risk is associated with higher ______ costs.
- Counterparty credit risk is a function of the probability of default, exposure at default, and loss given default. Assuming that the individual exposure at default with a counterparty is fixed, which of the following statements is correct? A. The probability of default can be mitigated by collateral, and exposure at default can be mitigated by netting. B. The probability of default can be mitigated by netting, and exposure at default can be mitigated by collateral. C. Loss given default can be mitigated by collateral, and exposure at default can be mitigated by netting. D. Loss given default can be mitigated by netting, and exposure at default can be mitigated by collateral.1. Explain how an installment loan differs from revolving credit in terms of risk and the nature of the return to the lender.q19 Which of the following statement is true for compensation of risk? a. Higher the risk, zero is the return b. Higher the risk, lower is the return c. Lower the risk, higher is the return d. Higher the risk, higher is the return q20 Which of the following is used generally for raising cash for settling the creditors? a. Short Term Loan b. All the options are wrong c. Line of Credit d. Long -Term Loan
