CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

If lenders believe projects will likely produce valuable future cash flows, they may be likely to ______

A. contribute capital for equity.
B. raise the costs of borrowing.
C. ask the borrowers to pledge assets as collaterals for their loans.
Correct Answer: A

User Contributed Comments 5

User Comment
Emily1119 Why a?
moneyguy The lender may be interested in receiving a percentage ownership in the project (contribute capital for equity). This would be a customized lending contract of some sort.
johntan1979 B and C will be the last things a lender will do for a company with bright future prospects.
joeclark I would go to B as "lender" but of course it will be usurious so A is the most apt answer.
MathLoser Produce valuable future cash flows -> lower risk -> no need to raise the costs of borrowing -> no need to ask the borrowers to pledge their assets.
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