Governments are prevented from borrowing unlimited funds through the enforcement of debt limits. Explain the concept of debt limits. How is the concept of borrowing power or debt margin connected to debt limit?

Governments are prevented from borrowing unlimited funds through the enforcement of debt limits. Explain the concept of debt limits. How is the concept of borrowing power or debt margin connected to debt limit?

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter8: Subprime Lending Fiasco-ethics Issues

Section: Chapter Questions

Problem 1Q

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Govenments are prevented from barrowing unlimited funds through the enforcement of debt limits. Explain the concept of a debt limit. How is the concept of barrowing power or debt margin connected to debt limits?
Why lenders assume no risk in granting loan to the government though the return of this type of loan is minimal?
If the national debt increases, is it true that we need not worry about the debt as long as the country is able to make payments on the debt? State why or why not. Explain your answer clearly.
Explain how the bond market facilitate government (fiscal) policies. How do you think the bond market could discipline a government & discourage the government from borrowing (& spending) excessively?
what is ADVANTAGES AND DISADVANTAGES OF THIS MORATORIUM FOR THE BANKS AND BORROWERS? provide EXAMPLES.
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Which of the following is not a reason for the issuance of long-term liabilities? Debt financing dilutes ownership interest. Debt may be the only available source of funds. Debt financing may have a lower cost. Debt financing offers an income tax advantage.
All of the following are common loan restrictions except? * restrictions on dividends or other payments to owners and/or investors limits on total equity limits on total debt restrictions on additional capital expenditures
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Which of the following is a reason that banks may favor fee compensation over balance compensation? Balance compensation is not as visible as fees for budgeting purposes. The strategy involves attracting deposits to fund their loans. Earning credits used to determine the value of collected balances are taxable. Deposit balances increase liabilities on the balance sheet.
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