Which of the following statements regarding secured debt are correct? Asset loans are usually secured by large assets like automobiles, machinery, and other equipment. It is the debt that is secured by specific assets that can be seized for nonpayment. Lenders must use a court action in order to collect the loan if the borrower does not make the agreed payments. Commercial banks and credit unions make secured loans.
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Statement 1: Asset loans are usually secured by large assets like automobiles, machinery, and other equipment. This is generally true. Secured loans use collateral to reduce the lender's risk. Statement 2: It is the debt that is secured by specific assets that Show more…
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Part 1. Select ALL the direct securities from the list below. Intellectual property Personal guarantees Buildings Corporate guarantees Inventory Part 2 Which of the following does NOT describe the fixed charge of security? The financial institute has the legal rights to the asset. The borrower can trade its assets unless there's a default on the loan payment. Securities with fixed charges are usually made up of non-current assets. The financial institute can take possession of the asset to settle the debt in case of loan default. Part 3 Which of the following is typically used as floating charge security? Letter of comfort Land Machinery Accounts receivable Part 4 If a loan is secured by a limited corporate guarantee, what will happen when the borrower is unable to repay the debt? The owner of the company will be personally responsible for completing the loan obligations. The guarantor will cover all the liabilities of the borrower regardless of the amount. The lender has the right to pursue the assets of the company within a specific dollar amount. Both the company and the company owner may be pursued to fulfill the debt obligation. Part 4a. Which of the following security assets are considered personal property? Select ALL correct answers. Consumer goods Factories Office buildings Land Bonds and equities
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Sue is starting a new business as a sole proprietor. She needs a loan and approaches the loan officer at the credit union to lend her money. The only assets that she has at the moment are the land and building where she carries on her business. If the bank manager wants to secure the loan to Sue, which is the most appropriate method?
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