what are two types of credit

Q: Which are the major problems facing a lender when reviewing a loan request made by a borrower?

A: Introduction: A loan agreement is nothing but an agreement between a lender and the borrower which…

Q: the lending operation, how many types of loans security?

A: In lending operations banks for their safety of loans ask  for some collateral.You have to provide…

Q: What is the difference between a line of credit and a short-term loan?

A: Short term loan:   A loan is borrowed money that is to be paid back along with the interest. A…

Q: For a creditor; how is a loan impairment recorded?

A: Creditors:   They are the outside entities to whom the business owes money for any product or a…

Q: What are the four categories of collateral value for secured loans?How does each affect credit risk?

A: Real property (e.g., land, buildings) Tangible personal property (e.g., equipment, vehicles)…

Q: Vhich of the following is not a credit ev O loan refinancing O bankruptcy O default O debt downgrade

A: Credit default swaps are derivative contract that are done between the the parties and done to…

Q: Credit card debt and commercial loans are easily among the most significant and familiar financial…

A: Credit card debt is a type of bank overdraft wherein the borrower needs to pay an interest amount…

Q: For what items may a lender require escrow accounts from a borrower?

A: Escrow account is the third party account in which securities or assets are kept until the…

Q: at is the relationship of Debt (Loans) to Borrowers to Financial Intermediaries?

A: The financial intermediaries are very important in the financial world and transactions and there…

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: How does credit risk affect insurance companies

A: Credit risks affect insurance companies in a tangible and often direct manner.

Q: Methods/instruments that banks use to hedge the risks pertaining loans

A: Main function of a bank is to accept deposit and then offer loans as both individual and business…

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: 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: 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: What are the 5 Cs of credit that are sometimes used by bankers and others to determine whether a…

A: While granting credit banks do analysis of that loan amount will be repaid without any problem.

Q: What types of short-term credit are classified as accrued liabilities?

A: An accrued liability means the expense of the business incurred during a specific period but has yet…

Q: What are the benefits of using debt security?

A: The financial instruments which are bought by investors, or corporations, or mutual funds, are…

Q: Describe the concept of non interest bearing on loan.

A: A non-interest bearing loan is a debt for which there is no documented requirement for the borrower…

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: . Accounts receivable financing is the term used to describe which of the following types of loans…

A: In Accounts receivable financing companies make a collateral of its account receivables to get loan…

Q: How does getting a secured loan using accounts receivableas collateral differ from factoring?

A: In factoring, the corporation sells their receivable balance to the factoring corporation at a…

Q: Discuss the two theories of mortgage default. What are the most important factors that influence the…

A: Mortgage Default In simple term mortgage default which is described as default from the borrower to…