Question

Hello guys Please I want you to help to solve this test Please help Which of the following is an advantage of using equity as a source of funding? It won’t dilute existing shareholder’s value of change ownership percentage. It’s very liquid and always accepted. The cost of equity is usually lower than the cost of credit. It doesn't have additional financial commitments. -------------------------------------------------------------- If you borrow $5,000 with 4% interest compounded annually, how much total interest do you need to pay after 2 years? 404 400 408 412 ------------------------------------------------------------------------------------------ Match the examples of credit with the corresponding categories. Revolving credit Installment Open credit Cell-phone bills Home equity line of credit (HELOC) Car loan -------------------------------------------------------------------- Assuming all else is equal, which of the following loans is most likely to have the lowest total interest cost? Secured non-amortizing loan Secured amortizing loan Unsecured non-amortizing loan Unsecured amortizing loan ------------------------------------------------------------------------------------------------ What is the advantage of a variable-interest loan? Borrower can capitalize on a reference rate decrease Protects the borrower from rising interest rates Reduces the total interest payments Makes it easier for the borrower to plan for future payments -------------------------------------------------------------------------------------------- What does underwriting include in the general lending process? Assessing the borrower’s eligibility for the loan Monitoring loan account Creating documentation for the borrower to sign Discussing loan amount and interest rate with the borrower ---------------------------------------------------------------------------------------------------- Which of the following tools is used to analyze the industry attractiveness in the credit application process? SWOT analysis PESTEL analysis Ratios analysis Management analysis -------------------------------------------------------------------------------------------- What do the liquidity ratios tell you in the financial analysis? The efficiency of inventory The capital structure of a company The company’s ability to pay off debt obligations The profitability of the company ----------------------------------------------------------------------------------------------------- Which of the following are not part of the 5Cs of credit? Select all that apply. Character Commitment Candor Conditions Collateral ------------------------------------------------------------------------------------------------- In the 5 Cs of credit, what does capacity measure? The management’s attitude towards risk and growth The assets available to secure the debt in the event of a default The company’s profitability and cash flow to manage operations and growth The financial structure and overall financial strength of a company ----------------------------------------------------------------------------------------------------------

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