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Loan Security 1) Select ALL the direct securities from the list below

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Loan Security

1) Select ALL the direct securities from the list below.

A-Personal guarantees

B-Intellectual property

C-Buildings

D-Inventory

E-Corporate guarantees

2-Which of the following does NOT describe the fixed charge of security?

A-The borrower can trade its assets unless there’s default on loan payment.

B-The financial institute can take possession of the asset to settle the debt in case of loan default.

C-The financial institute has the legal rights to the asset.

D-Securities with fixed charges are usually made up of non-current assets.

3-Which of the following is typically used as floating charge security?

A-Land

B-Letter of comfort

C-Accounts receivable

D-Machinery

4-If a loan is secured by a limited corporate guarantee, what will happen when the borrower is unable to repay the debt?

A-Both the company and the company owner may be pursued to fulfill the debt obligation.

B-The guarantor will cover all the liabilities of the borrower regardless of the amount.

C-The lender has the right to pursue the assets of the company within a specific dollar amount.

D-The owner of the company will be personally responsible for completing the loan obligations.

5-Which of the following security assets are considered personal property? Select ALL correct answers.

A-Consumer goods

B-Land

C-Bonds and equities

D-Factories

E-Office buildings

6-Which of the following may indicate low-quality inventory?

A-The inventory turnover ratio is high.

B-The product is a commodity, not a specialized product.

C-The inventory is finished goods.

D-There is a limited shelf-life.

7-Which of the following is NOT an aspect to consider when evaluating the quality of machinery and equipment?

A-The market value of the asset

B-The life expectancy of the asset

C-The condition of the asset

D-The cost to maintain the asset

8-Which is a typical source of information used in ascertaining the value of the real property?

A-Invoices

B-Bills of sale

C-Real estate listings

D-Purchase contracts

9-It is the legal counsel’s responsibility to: (Select ALL correct answers)

A-Provide accurate evaluations of the borrower’s assets used as security.

B-Advise the guarantor that they will be liable to remedy the failure if the borrower fails to make a payment on time.

C-Ensure that the security is properly registered.

D-Advise the borrower that the lender can pursue all their assets in the event of default.

 

10-Which of the following is NOT correct on security registration and documentation?

A-The registration of the security is done differently in various jurisdictions around the world.

B-Common Security documentations include mortgage appraisal, assignment of leases and rents, and general security agreement.

C-It is the borrower’s responsibility to ensure that the loan security documentation is properly completed and registered.

D-It is the lender’s responsibility to ensure all loans are adequately secured.