Ask Question
BusinessBusiness
19 September, 19:19

The use of collateral A. allows banks to charge higher interest rates on loans. B. makes it more costly for borrowers to take advantage of their asymmetric information. C. makes it more costly for lenders to take advantage of their asymmetric information. D. has important tax implications for both borrowers and lenders.

+1
Answers (1)
  1. 19 September, 20:22
    0
    The correct answer is B. The use of collateral makes it more costly for borrowers to take advantage of their asymmetric information.

    Explanation:

    In finance, a collateral or guarantee is a transferable asset or a surety, or even a promise of guarantee, used to cover the credit risk during financial transactions in the event that the borrower cannot meet his payment obligations.

    A secured loan means a loan in which the borrower commits certain assets as a guarantee of credit, this the latter then becoming a partially secured debt for the creditor who made this loan.

    The guarantee may consist of cash (pledge of cash account in retail bank, cash-collateral in investment bank) or securities.

    Another form consists of a simple commitment: commitment by signature of a bank towards its client, promise of collateral or mortgage, letter of intent.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The use of collateral A. allows banks to charge higher interest rates on loans. B. makes it more costly for borrowers to take advantage of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
A bond is issued with a face amount of $500,000 and a stated interest rate of 10%. The current market rate of interest is 8%. These bonds will sell at a price that is: Multiple Choice Less than $500,000.
Answers (1)
A written promise to pay certain sum of money to another person or company is a
Answers (2)
On july 9, mifflin company receives a $8,500, 90-day, 8% note from customer payton summers as payment on account. what entry should be made on july 9 to record receipt of the note?
Answers (2)
How would life be different if quick service restaurants didn't exist? Would this be a positive change or a negative one? Explain.
Answers (1)
What little details do you take pride or find satisfaction in?
Answers (2)
New Questions in Business
Weaver Corporation had the following stock issued and outstanding at January 1, Year 1: 99,000 shares of $14 par common stock. 8,000 shares of $80 par, 4 percent, noncumulative preferred stock.
Answers (1)
Consumption, investment, and government spending and tax revenues are given by the following information: C = 100 + 0.
Answers (1)
Prior to liquidating their partnership, Pepper and Russo had capital accounts of $30,000 and $119,000, respectively. The partnership assets were sold for $55,000. The partnership had no liabilities. Pepper and Russo share income and losses equally.
Answers (1)
Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H.
Answers (1)
Taxable Earnings column on the payroll Register records? what? a) what wages will be taxed b) actual tax c) estimated tax d) all of these e) None of these
Answers (1)
Home » Business » The use of collateral A. allows banks to charge higher interest rates on loans. B. makes it more costly for borrowers to take advantage of their asymmetric information. C.
Sign Up Forgot Password?