Why is the degree of collateral as specified in the loan agreement of importance to a lender?

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Why is the degree of collateral as specified in the loan agreement of importance to a lender? If the book value of the collateral is greater than or equal to the amount of the loan, is the credit risk of a lender fully covered? Why, or why not?

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Financial Institutions Management A Risk Management Approach

ISBN: 978-0071051590

8th edition

Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders

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Question Posted: Dec 17, 2015 04:50 AM

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Why is the degree of collateral as specified in the loan agreement of importance to a lender?

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Collateral provides the lender with some assets that can be used against the amoun...View the full answer

Financial Institutions Management A Risk Management Approach

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