Main Question Set 8 00 Which of the following statements is TRUE regarding loan security? Review Later An analyst should aim to secure a loan with one of each type of loan security Financial institutions should always approve loans if the value of the security can cover the value of the loan It is unnecessary to take security of the company has a good history with the financial institution Loan security protects the lenders claim against unforeseen and unfavorable events. Main Question Set N Review Later Which of the following is a primary reason for why the ownership structure of a company is important for the credit application? Knowing the ownership structure provides an idea of how many parties are affected if the company defaults on its loan and undergoes bankruptcy proceedings. The bank can go after the personal assets of the owners of the corporation, even if they have not signed a personal guarantee. The bank needs to know who the owners are so it can maintain its relationship with them for future transactions Knowing the ownership structure gives an idea of who the primary decision-makers are and the effectiveness of the decision- making process. Main Question Set 4 Which of the following statements is TRUE about reviewing a borrower's history and background? Review Later A borrower's history with the financial institution should not be used for annual reviews as it may skew the credit evaluation with non-current information You should review what an existing borrower's company offers every year to ensure they have not changed their primary market or value proposition For existing borrowers, the most important part of the annual review process is to review changes that have occurred since the last review. Extending a loan to a newer company is safer than an older company because the lender can place stricter covenants