Explain the determinants of credit olicy variables. 2. Explain the hotives for the extension of the rade credit.

Q: Explain the term Wraparound Loans?

A: Wraparound Loans:Wraparound Loans are also called as wrap. It is a type of mortgage loan.It allows a…

Q: How do you compute the receivables turnover ratio?

A: Receivables turnover (RT) ratio: this is an accounting measure which shows the effectiveness of a…

Q: What is meant by credit risk analysis?

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Q: What is the basis for the discount rate in a DCF analysis? Describe how this rate mightbe estimated.

A: Basis of discount rate in DCF analysis is to compute the PVF of future Cash Flows expected as it is…

Q: What is the Relationship between the Incremental Cost and the Loan-to-Value Ratio?

A: The question is based on the concept loan to value ratio and its relationship with incremental cost.

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 is the Effect of Loan-to-Value Ratio on Loan Cost?

A: LTV ratio tells about the maximum loan approved in terms of the value of the collateral given.

Q: what basic criteria are commonly used in evaluating credit risk?

A: Credit risk is the risk of facing a loss due to a counterpart's failure to repay the debt in part or…

Q: Credit scoring is a process used to   Multiple Choice   determine what interest rate to charge a…

A: Credit score : it is a number between 300 - 850 which depicts consumers creditworthiness.

Q: Describe some ways to manage credit risk at a nonfinancialcompany

A: Evaluation of the customer prior to granting credit. Nonfinancial Company does self-evaluation or…

Q: Please explain the difference between the terms interest rate and required return by defining each.

A: The amount which is charged by the lender to the borrower in order the use assets is known as the…

Q: Describe the incremental analysis approach for evaluating aproposed credit policy change.

A: Appropriate income statements can be contrasted to assess the difference in credit policy. This can…

Q: Explain Effective Cost of Two or More Loans?

A: When there is the existence of a situation, where the borrower takes an option to finance the…

Q: What is the importance of Credit Rating Agency?

A: Credit Rating agencies assign the credit rating to the issuer of debt. They provide information…

Q: Develop various interest formulas for the credit calculations?

A: The interest on interest computation figures the formula of compound interest on the loaned or…

Q: do the terms dehit and credit signify increase or decrease or can they signify either ? Explain

A: The effect of debit or credit on an account depends upon the nature of that account. It depends…

Q: How is the receivables turnover ratio measured? What does this ratio indicate? Is a higher or lower…

A: Receivables turnover ratio is measured by dividing net credit sales of a period by average accounts…

Q: When a lender looks at your FICO credit score to decide whether to lend to you, which of the “Five…

A: The five Cs of credit is a system used by lenders to get the creditworthiness of borrower

Q: For short term credit decisions which ratio is used? Select one: O a. Current Ratio O b. None O c.…

A: Explanation: Short term credit decision are made by the company are related to the financing needs…

Q: What are the main differences between ARMs and FRMs loans? You need to highlight the differences in…

A: Loan which are provides to the borrower either in Adjusted Rate of Mortgage or Fixed Rate of…

Q: Explain CECL (“Current Expected Credit Loss”) model.

A:

Q: what are the strategies to improve credit

A: Credit is referred as an agreement, which are between the borrower and the lender. It might decrease…

Q: ernal rate of return and the discount rate turn pany's discount rate or internal rate of return unt…

A: To find the correct option as,

Q: Compute and interpretfinancial ratios that would beuseful to a long-term creditor.

A:

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: What is net interest margin(NİM)?

A: There are various profitability ratios

Q: ctive interest rate

A: The objective is to find the name of the interest that is defined as the interest paid on the…

Q: Define credit period

A: The purchase and sales transactions are in the form of cash or credit. If the payment is made at the…

Q: Write the different types of loans available?

A: Types of loans available as follows: Debt Consolidation Loans: A consolidation credit is intended to…

Q: What are the five Cs of credit? How do these serve as a yardstick for creditevaluation?

A: The “5 Cs of credit” is a system used to estimate the creditworthiness of the borrowers. The 5 Cs…

Q: EXplain the loan structuring?

A: Loan restructuring is designing of loan according to the requirements of the borrower and also to…

Q: Which one of the following is a spontaneous source of financing? Select the correct response:…

A: Spontaneous source of financing is the short term financing needed for business transactions which…

Q: What are the four credit policy variables?

A: Credit policy is formed to manage the account receivables. It directly effects the working capital…

Q: credit risk analysis involves 2 type of approaches which is Art and science approach" 1. What is…

A: Credit analysis is the analysis of a business or organisation to determine whether they will be able…

Q: Explain the effective lending rate (ELR) and how it is derived?

A: ELR is generally used to know the true cost of lending. This concept is useful when be borrow money…

Q: credit risk analysis involves 2 type of approaches which is Art and science approach" Give examples…

A: Credit risk analysis is a process of identifying the possible loss on an investment by assessing the…

Measuring Your Credit Capacity

Credit capacity means determining one’s ability to manage credit. The credit capacity of the individual or an organization is measured based on the details of the earnings, expenses, and previous debts. Credit capacity valuation is crucially required in obtaining huge debt obligations from a lender such as housing loans, car loans, and business loans.