Chương 17

Foreclosure on property pledged behind a bank loan does not subject a bank to liability to clean up any environmental damage the borrower may have caused to happen.

• T

• F

In the United States about 25 percent of banks' total loans consist of commercial and industrial loans.

• T

• F

Self-liquidating business loans are designed to take advantage of the normal cash cycle in a business firm.

• T

• F

Short-term (under one year) loans to business firms account for over half of all bank loans to businesses in the United States.

• T

• F

Working-capital loans are normally secured by a business firm's plant and equipment.

• T

• F

Working-capital loans, unlike most other types of business loans, usually do not require the customer to keep a compensating deposit balance with the lending bank.

• T

• F

Leveraged buyouts (LBOs) involve the purchase of businesses or of selected assets from business firms with at least 75 percent of the cost of the purchase funded by current earnings and sales of stock.

• T

• F

A project loan secured by the credit of the company or companies sponsoring the project is called a project loan granted on a recourse basis.

• T

• F

Term loans normally are secured by accounts receivable and inventory.

• T

• F

Term loans look primarily to the flow of future earnings of the borrowing business firm to amortize and retire its loan.

• T

• F