Credit scoring is a process used to   Multiple Choice   determine what interest rate to charge a borrower, based on risk considerations.   determine the amortization period for a term loan, based on risk considerations.   calculate a borrower's return on equity.   calculate a borrower's leverage position.

Q: What are the factors on which the cost of a loan depends?

A: Cost of loan are the expenses brought about by the borrower for taking the advance because of the…

Q: how can Credit Metrics Model resolve credit risk management issues

A: what is credit risk- credit risk is that the risk to default ensuing from a receiver failure to…

Q: Discusses price changes for interest rates on loans explain why this change may be taking place.

A: Interest rate are the percentage of the loan amount which the borrower needs to pay to the lender in…

Q: You now need to calculate the cost of debt for Harvey Norman. Go to www.westpac.com.au and find the…

A: Harvey Norman Holdings WACC % As of today (2020-11-17), Harvey Norman Holdings's weighted average…

Q: Which of the following does not relate to credit risks?   Select one: A. Credit risk is the…

A: Before answering the question, we should understand what Credit Risk means  Credit Risk: It is the…

Q: Explain in general terms how the portions of loan payments going to principal and interest change…

A: Installment loans gradually pay down the loan principal while the payments remain the same .…

Q: nterest is a method of calculating the interest to be paid on a loan by combining the principal…

A: Add on interest refers to the method which is used when the person acquire the loan or the mortgage…

Q: What is the difference between a credit sale (with a higher price as compared to the cash sale) and…

A: The amount of Sales made in credit has to be collected after certain period of time. In case of cash…

Q: HOW TO Find the finance charge of an installment loan.

A: Finance Charge: Generally speaking, financial charges are any fees or charges associated with…

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: Estimating liquidity needs involves: A. forecasting the level of future loan commitments and…

A: Liquidity is the need of funds

Q: From the standpoint of a borrower, is long-term or short-term credit riskier? Explain

A: credit risk is define as the chances of a loss due to  borrower's failure to repay obligation in…

Q: Describe a short-term financing option and discuss the advantages and disadvantages.  Is there a…

A: Short term financing: Any loan that is obtained for a short period of time is Short Term financing.…

Q: In hedging, interest rate swap (IRS) can be used to hedge against rising rates, falling rates,…

A: to understand the topic better, the interest rate swap is defined as the contract between any two or…

Q: Explain the addition to the interest rate, HELOC borrowers consider the issues?

A: Home buyers mostly take loans to buy the home and they will pay the debt in equated installments.…

Q: The actual amount that is given to the borrower is called the after the loan has been discounted.

A: Basically a discounted loan has three components Discount Proceeds Maturity Value

Q: When one examines a REIT investment, why it is important to consider the terms of the company’s…

A: REIT stands for Real Estate Investment Trust. It manages and operates properties that generate gain…

Q: From the borrower’s standpoint, what are the advantages and disadvantages ofsecuring a loan?

A: Secured loans means offering an asset or  property to the lender as a collateral against the funds…

Q: Define Loan Refinancing?

A: Introduction: A loan refinancing permits a debtor to replace their present obligation of debt with…

Q: What will be the Effect of the After-Tax Interest Cost on Loan Decisions?

A: Interest cost for loan borrowers depends mainly upon the rate of interest charged by lenders.…

Q: Discuss briefly the liquidity preference theory (LFT) and differentiate it from the loanable funds…

A: Liquidity is referred as the degree, where the security used to buy or sell quickly in the market at…

Q: Explain Loan Closing Costs and Effective Borrowing Costs?

A: Closing costs are the uses that buyers and vendors ordinarily pay to total a real estate deal, over…

Q: What is the difference between interest rate risk and default risk? How do combinations of terms in…

A: Interest rate risk is the risk of an investment due to changes in interest rate. When market rates…

Q: Create a plan of investment on a bank and solve its interest with respect to the rate offered and…

A: Simple interest is computed on the loan's initial main amount, but compound interest is calculated…

Q: What are the potential problems or limitations of using methods, to estimate the cost of debt, that…

A: The cost of debt is the rate that is paid by a corporation on its debt. The debt may include bonds,…

Q: How can fi nancial statement analysis be used to evaluate the credit quality of a potentialfi…

A: Whenever, an investor is considering an investment proposal, he need to analyze the various things…

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: Loans and receivable should be measured subsequent to initial recognition at *   a. Amortized cost…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: Explain Inflation, Mortgage Pricing, and Payment Structuring

A: Inflation:  Increase in price of the good is called inflation. When inflation increases, the…

Q: Explain in your own words the difference between the lender's yield and the effective borrowing…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: What is the significance of credit/debt ratings

A: Credit Ratings: Credit Rating is an estimate of the borrower (be it a person, organization, or…

Q: Securitization is the financial practice of pooling various types of contractual debt, such as…

A: Securitization is a process in which a financial institution or any company merges its liquid assets…

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: Explain the term Loan Repayment Schedule?

A: Loan is a sum of money borrowed by an individual/organization from a bank or lender that has to be…

Q: Which of the following is the function of the financial market ? Select one :  a .  It decides the…

A: The financial system is the most important factor in economic transformation. Finance helps bridge…

Q: Which of the following shows the timeline of the loan from the lender's perspective?

A: A lender is the one who lends to the other party. In return, the lender receives the sum with an…

Q: a) Falco Inc. is considering a debt issue and is trying to determine the appropriate amount to…

A: Optimal capital structure is a mix of debt and equity which would maximize the value of the company.

Q: Explain the difference between debt to income (DTI) ratio and loan to value ratio (LTV). In…

A: The question is based on the explanation of Lending ratios, Debt to income (DTI) ratio and loan to…

Q: Explain why a long term creditor should be interested in liquidity ratios. Include some examples or

A: Introduction : In simple word, the liquidity of a business refers to the amount of cash or easily…

Q: Explain the Market Value of a Loan?

A: The market price of Debt refers to the value investors would be willing to shop for a company’s debt…