QUESTION 1 Which if the following is not true of the 5Cs in evaluating credit quality Character refers to the integrity and honesty of the borrower and applies to both individuals and companies Capital refers to the savings or wealth of the borrower as an additional source of income to repay the loan Collateral refers to assets that are pledged to lender Capacity refer to external factors including the state of economy that can impact the borrower’s source of income. QUESTION 2 Which of the following is not true? Firm A Firm B Industry Benchmark 2018 2019 2020 2018 2019 2020 2018 2019 2020 ROA 9.14% 9.50% 9.90% 8.11% 8.16% 8.19% 8.11% 8.14% 8.15% ROE 22.45% 22.95% 23.45% 19.65% 19.88% 20.12% 19.95% 20.55% 21.00% TIE 1.75 1.65 1.55 2.75 2.90 3.05 2.25 2.30 2.50 CR 3.25 3.66 3.75 2.55 2.65 2.75 2.40 1.45 2.50 EPS 1.90 2.10 2.25 1.55 1.65 1.75 1.52 1.55 1.60 Based on ROA, Firm A is doing better than Firm B and the Industry benchmark. Based on Times Interest Earned, Firm A is doing better than Firm B and the Industry benchmark. Based on ROE, Firm A is doing better than Firm B and the Industry benchmark. Based on current ratio, Firm B is doing better than the Industry benchmark.
QUESTION 1 Which if the following is not true of the 5Cs in evaluating credit quality Character refers to the integrity and honesty of the borrower and applies to both individuals and companies Capital refers to the savings or wealth of the borrower as an additional source of income to repay the loan Collateral refers to assets that are pledged to lender Capacity refer to external factors including the state of economy that can impact the borrower’s source of income. QUESTION 2 Which of the following is not true? Firm A Firm B Industry Benchmark 2018 2019 2020 2018 2019 2020 2018 2019 2020 ROA 9.14% 9.50% 9.90% 8.11% 8.16% 8.19% 8.11% 8.14% 8.15% ROE 22.45% 22.95% 23.45% 19.65% 19.88% 20.12% 19.95% 20.55% 21.00% TIE 1.75 1.65 1.55 2.75 2.90 3.05 2.25 2.30 2.50 CR 3.25 3.66 3.75 2.55 2.65 2.75 2.40 1.45 2.50 EPS 1.90 2.10 2.25 1.55 1.65 1.75 1.52 1.55 1.60 Based on ROA, Firm A is doing better than Firm B and the Industry benchmark. Based on Times Interest Earned, Firm A is doing better than Firm B and the Industry benchmark. Based on ROE, Firm A is doing better than Firm B and the Industry benchmark. Based on current ratio, Firm B is doing better than the Industry benchmark.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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QUESTION 1
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Which if the following is not true of the 5Cs in evaluating credit quality
Character refers to the integrity and honesty of the borrower and applies to both individuals and companies
Capital refers to the savings or wealth of the borrower as an additional source of income to repay the loan
Collateral refers to assets that are pledged to lender
Capacity refer to external factors including the state of economy that can impact the borrower’s source of income.
QUESTION 2
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Which of the following is not true? Firm A Firm B Industry Benchmark 2018 2019 2020 2018 2019 2020 2018 2019 2020 ROA 9.14% 9.50% 9.90% 8.11% 8.16% 8.19% 8.11% 8.14% 8.15% ROE 22.45% 22.95% 23.45% 19.65% 19.88% 20.12% 19.95% 20.55% 21.00% TIE 1.75 1.65 1.55 2.75 2.90 3.05 2.25 2.30 2.50 CR 3.25 3.66 3.75 2.55 2.65 2.75 2.40 1.45 2.50 EPS 1.90 2.10 2.25 1.55 1.65 1.75 1.52 1.55 1.60 Based on ROA, Firm A is doing better than Firm B and the Industry benchmark.
Based on Times Interest Earned, Firm A is doing better than Firm B and the Industry benchmark.
Based on ROE, Firm A is doing better than Firm B and the Industry benchmark.
Based on current ratio, Firm B is doing better than the Industry benchmark.
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