Q2. When offering loans to small firm, the lenders normally will require the company share of the small firm as a collateral of the loan. That means, if the firm defaults in the payment of loan, the share ownership of the small firm will be transferred to the lender. Explain the reasons for the lender in setting this requirement. Also illustrate the advantages it may have if the ownership of the firm is in the form of corporation.

Q2. When offering loans to small firm, the lenders normally will require the company share of the small firm as a collateral of the loan. That means, if the firm defaults in the payment of loan, the share ownership of the small firm will be transferred to the lender. Explain the reasons for the lender in setting this requirement. Also illustrate the advantages it may have if the ownership of the firm is in the form of corporation.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 9QTD

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