All of the following may be considered causes of the “dark side” of credit except: Group of answer choices B. Operational issues that affect credit assessments can have a systematic effect on the whole consumer portfolio. D. Historical data tends to be consistent and can lead to accurate forecasts. A. Tendency of consumers to default is a product of changing legal and social systems. C. Sharp changes in the economic environment, such as a deep recession.

Q: re are claims that the central bank caused the recession, and due to them, production has dropped…

A: Central bank are very important in the country and role of central banks have become major factor in…

Q: A change in credit policy has caused an increase in sales, an increase in discounts taken, a…

A: A CREDIT POLICY DECIDE WHO IS ELIGIBLE FOR CREDIT FROM YOUR COMPANY AND DETERMINES HOW YOU WILL…

Q: How did Office Smart increase its market share—possibly by lowering credit st

A: : Credit standards: Credit standards can be defined as a set of guidelines existing in the company…

Q: In the credit market model with asymmetric information, determine how a consumer will respond to an…

A: Asymmetric information In credit market, asymmetric information means the lenders or the borrowers…

Q: According to Koch and MacDonald (2009), banks’ risk can be identified as six types: credit risk,…

A: Model risk is a type of risk that arises when a financial model is used to calculate quantitative…

Q: Discuss the concepts of adverse selection and moral hazard. Provide an example of each of these…

A: Adverse selection or negative selection describes a situation where the two parties to a transaction…

Q: Credit markets are driving long-term changes in banks. Forces that combined to lead to a…

A: Cost of credit depends on quality of credit provided.

Q: Define “financial frictions” in your own terms andexplain why an increase in financial frictions is…

A: Financial frictions can be defined as some conditions that exists in order to stop the financial…

Q: Central Banks are in fact not at fault when it comes to turning economy into recession and…

A: Each country has its own central bank and a country’s central bank has the power to control that…

Q: The concept that market forces in the macroeconomy can remedy a recession is referred to as:…

A: Monetary Policy- Monetary policy refers to the actions and communications of the central bank in…

Q: Is it correct to state that banks’ returns will be higher if interest rates increase? Outline the…

A: The duration analysis is the method through which the financial institutions determine the change in…

Q: Which of the following statements is false?   A. Credit spreads narrow during an economic…

A: Credit Spread is the difference between the yield of the bonds with similar maturity but having…

Q: Which of the following is not among the consequences of a loose credit policy ?     a) Sales…

A: Introduction: A loose credit policy refers to a credit policy intending to increase the money supply…

Q: f a bank's credit ratings decrease, How does this affect borrowers, lenders, and financial…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Which of the following statements is false?   A.   Banks have high levels of liquidity assets and…

A: Duration of bond measures the sensitivity of prices of bonds with change in interest rate in the…

Q: financial intermediaries play a crucial role in an economic crisis-they are responsible for both…

A: Financial intermediaries: Financial intermediaries are organization which are acts as a link between…

Q: Why do credit ratings change? How can these changes affect investors?

A: Credit ratings are assigned on the basis of extensive economic analysis by the credit rating…

Q: he purpose of the inflation premium is to maintain the purchasing power of money while it is loaned…

A: a) An inflation premium is added to interest rates for compensating for expected inflation by…

Q: Show that the Ricardian Equivalence does not necessarily hold if the assumption of perfect credit…

A: Ricardo's equivalence is an economic theory that states that funding government spending from…

Q: Do you think that IFRS 9 may make loans more expensive for borrowers?  Implementation of IFRS 9 will…

A: IFRS 9 follows the expected credit loss model, which regulated the provisioning to be done by the…

Q: an example of how the factors in a firm's credit policy might differ between relaxed and restrictive…

A: Answer: The company’s credit policy consists of the following four key factors like credit period,…

Q: Explain why the highest probable key risk drivers in the Single Supervisory Mechanism risk map is:…

A: The current pandemic crisis challenges the banking system along known and unknown tracks. While the…

Q: Why are credit rating agencies reliable/unreliable?

A: Credit Rating agencies are unreliable because of the following reasons: 1-Ideological biases: In…

Q: Tirole’s model of moral hazard associated with external financing (whether debt or equity) has…

A: A moral hazard develops when there is disproportionate knowledge between two parties and a shift in…

Q: heir loans in one industry so that they can specialize on that industry and reduce the credit risk…

A: Credit risk means risk of default in payment obligation by borrower.

Q: Only (b) and (c) are true.

A: Mark to market rule refers to the method in which fair values in the account which relate to the…

Q: Why would an investor want to have some sort of credit enhancement included in a securitization? a.…

A: In finance, securitization is the process of conversion of an asset, most commonly the conversion of…

Q: Do you believe Credit Ratings Agencies face a moral hazard based on their Issuer-Par business model?…

A: Credit rating agencies are the institutions which rate the solvency status and debt burden capacity…

Q: Which of the statement is TRUE in financial decision making?      A. When the economy is growing of…

A: Financial Decision making refers to the decisions made by the managers with regard to the finances…

Q: Financial intermedires play a crucial role in an economic crisis they are responbile for both…

A: Financial intermediaries are the middle person between the financial market and the investors. They…

Q: Which is correct with regards to the effects of restricting credit standards? a. Investment in…

A: Restricting credit standard means company strict the credit policy. When company is more concerned…

Q: Most credit cards charge a relatively high rate of interest, yet many people carry them, including…

A: Bank card interest rates could appear outrageous, some stretching past a 20% annual percent expense,…

Q: All of the following are purposes of internal risk rating systems except: Group of answer choices…

A: Answer (C). Inadequacy of loan reserves

Q: The goal of credit policy

A: The credit policy of a firm refers to the principles laid down by the firm regarding lending. The…

Q: QuickBank has decided to lower the interest rate it charges on business loans in order to attract…

A: Adverse Selection: It is a problem Created when there is asymmetric information before a transaction…

Q: How does a lower credit rating affect borrowers lenders and financial institution? What are the…

A: The credit rating is a measurement of the creditworthiness of the borrower. In the capital market,…

Q: Credit Ratings Agencies face a moral hazard based on their Issuer-Par business model. Why is this…

A: Credit Ratings have always faced the ethical dilemma of having to provide credit for the issuer and…

Q: Analysts and theorists have debated over the different factors that caused the subprime mortgage…

A: Financial crisis refers to a situation where an economy faces a decline in the value of its assets,…

Q: Please explain: Managers estimate bad debt expense based on​ which of the following? professional…

A: Accounting principles means those set of standards which is followed while preparing the books of…

Q: What is a key function of credit-rating agencies? Docredit-rating agencies always provide reliable…

A: Credit rating is the rating on the basis of which the credibility of the borrower is assessed by…

Q: the people tend to be dishonest None of the answers are correct the person who borrows

A: Explanation : When one side to a financial exchange knows more tangible understanding as compared to…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.