Exam 24: Debtor-Creditor Relations and Bankruptcy

A commitment to make a loan must always be in writing.

Interest is generally computed on a ________ basis.

A(n)________ guaranty is enforceable only with respect to a specified transaction or series of transactions.

Requirements that must be met under the loan agreement before the lender's obligations arise are known as ________.

A debt subordination is an agreement whereby one or more creditors of a common debtor agree to defer payment of their claims until the debtor is solvent again.

In a ________ loan,the lender may require the entire principal to be repaid in one lump sum upon maturity or in equal or unequal installments.

In order to reflect the greater risk to the lender,secured loans are priced at a higher rate than unsecured loans.

A ________ interest rate fluctuates throughout the life of the loan according to the interest rate that the lender would pay if it borrowed the funds in order to relend them.

If a borrower fails to repay a secured loan,the lender,may foreclose on the collateral.

When a bank has failed,federal banking agencies have used a doctrine called ________ to avoid certain debts that would ordinarily be valid against the bank.

________ in the loan documents typically require the borrower to maintain its corporate existence,pay taxes,maintain insurance,and comply with applicable laws.

Which of the following is true regarding when a company enters the "zone of insolvency"?

A loan backed up by collateral is knows as a(n)________ loan.

A(n)________ loan is paid off over a period of time.

Under a guaranty of collection,the guarantor becomes obliged to pay only after the lender has attempted unsuccessfully to collect the amount due from the primary debtor.

A law that limits the maximum rate of interest that may be charged is called a(n)________ law.

In a Chapter 11 proceeding,after the first 120 days from the date of the order for relief,________ may propose a plan.

Commercial paper is a term that describes short-term corporate indebtedness.

In order to arrive at an actual interest rate,a ________ is an amount added to the bank's theoretical cost of obtain funds to lend.

Several commentators have criticized the Bankruptcy Code as too easily excusing individuals and businesses from honoring their lawful obligations.From a societal standpoint,do you believe that the Bankruptcy Code plays a positive role in social and economic relationships? What changes,if any,would you recommend?