Borrower College Essays Samples For Students

Five C’s of credit is an effective method used by lenders to rate the worthiness of borrowers. 5 C’s are the very important for a lender as well as borrower to have before acquiring credit or to borrow money as it tells lender how much sincere the borrower is and if borrower is good in 5 C’s then he/she can get attractive interest rates. So, what this 5C stands for? 5C stands for Character, Capacity, Capital, Collateral and Conditions.

Character: It also refers to as borrower’s credit history. How much the borrower is sincere in repaying ...

(Institution Name)
There are five things that a lender considers before lending money to a potential borrower, and these points are called the five Cs of credit (Investopedia, 2016).
Capacity: This means that the ability of the borrower to meet e-pay back terms of the loan with interest. For example, a lender will lend money to a borrower who has the financial assets or employment that can help him paying back the lent money easily. The higher the capacity of the borrower, the larger the loan that can be taken.
Capital: The current financial position of the borrower is ...

Abstract

When borrowers fail to pay their debt, lenders have a right to recover their loans from borrowers. There is a judicial foreclosure process that every lender has to follow in state of Florida. The state of Florida has witnessed very high rate of foreclosure in recent times in comparison of other US states. There is no other process of foreclosure in the state of Florida while other states provide other states provide alternative ways to foreclosure. Florida is not the only one state where judicial foreclosure is the sole process of foreclosure, but there are several other states that ...

In 2008, there was a financial crisis which affected most of us. Till now, some countries are still recovering, including the United States. The crisis led to higher unemployment rate, lower disposable incomes, and bad loans. In all these cases, the number of loans applied by the citizens of a country and approved by lending institutions is anticipated to be lower. This will be true until a time the borrowers have increasing confidence in paying off their debt if they apply for one, and the lenders have confidence that the loans will get paid back. This will be the case when they ...

Introduction

In any market condition, information plays a critical role in structuring the demand and supply forces. All other things being constant, perfect and complete information to both buyers and sellers ensures that price determination takes place at a point that provides maximum benefit to the society as a whole. In such cases, the buyers or the sellers cannot influence the price. This scenario ensures equitable distribution of benefits to everyone in the society. However, perfect information is a characteristic of an ideal perfect market alone. It is not experienced in real life scenarios. Information asymmetry is a common phenomenon in the real life imperfect ...

The cash method of accounting is one where revenues are only recorded once cash has been received and similarly expenses are only recorded when cash is paid. When work is done or goods sold an invoice sent to the customer; no revenue would be recorded until the money has been received. Likewise, when the business owes debts to suppliers among other businesses, expenses are not recorded until the amount is paid. In the accrual basis of accounting, on the other hand, income is recognized and recorded immediately it is earned and expenses recorded immediately they are incurred whether the ...

Credit Risk Management

Commercial Loan Market
Commercial loans are debt arrangements agreed upon by the lender (business) and borrower (financial institution) to cover operational costs or fund business projects. During economic downturn, financial institutions are cautious of their lending and consequently import strict regulations that force borrowers to pay a higher interest rate. The agreement between the lender and borrower in the market is documented in a “credit agreement.” In credit risk management, the most important components of the agreement describe the covenants, the security requirements, priority of payments and events of default.

Segmentation of Commercial Loan Market

Financial institutions use credit rating to qualify borrowers based ...

QUESTION A

Credit Default Swap
It is a financial instrument lenders use to hedge default risk. The lender acquires a CDS and pays premiums to the CDS seller who takes the default risk (Lasher 200). If the borrower defaults, then the CDS seller pays the par value of the loan to the lender. The CDS seller also pays the protection buyer accrued interests on the loan during the intervening period.

Cash flows in case of no default

Annual CDS premium = 4% × 1,000,000 = $40,000
Quarterly payments = 40,000/4 = $10,000
A will pay quarterly CDS premiums to B for the three years. At the end of ...

5 C’s of Credit
5 C’s of Credit
In early times, the lack of financial institutions and absence of banks resulted in the exploitation of poor by the greedy financiers. Borrowers can only escape from the clutches of loan sharks if they have easy access to efficient credit networks. Moreover, credit network is also required so that the savers can deposit their money in reliable financial intuitions so that it can be channelized from the rich people to the poor industrialists (Ferguson, 2008). The primary relationship that money defines is between a lender and a borrower. This ...

Most of the services offered by a bank are largely financial in nature. However, the terms Assets and Liabilities have a different meaning when it comes to banks. For instance, assets in banking terminology would indicate fund usage, while liabilities in case of banks would, in fact, be a source of funds for banks. This essay will consider five different services or function that a bank offers and would explain with reasons if the said service is an asset or a liability, while also evaluating the services and providing an overall impression of the same.
This essay considers the ...

The main theme which is discussed in the articles “Spreading the Wealth” and “The micromagic of microcredit” is the poverty of the developing countries and how it is affected by a variety of economic phenomenas (globalization and microcredit, respectively). In particular, the authors of first article discusses the globalization and the standards of living in poor countries. The second article reveals the features of microcredit and how it affects the lives of poor people in Africa. It is difficult to compare the two articles thoroughly, since both of them describe different concepts, however, it is easy to see that ...

Credit Risk Management Analysis

Credit risk emanates from the peril of loss of principal or shortfall of a financial reward stemming from a borrower default to repay a loan obligation. The failures to honor a contractual agreement of a loan results of a wholesale credit risk. When a borrower envisages to use future cash flow to pay a current debt credit risk will eventually arise. Then the savers will assume credit risk by way of interest payment from the borrower or issuer of the debt obligation.
The wholesale credit risk, therefore, emanates from the defaulters of debt obligation that have been acquired from ...

Part A

The three basic categories of burglars are: (1) low-level, (2) mid-range, and (3) high-level. Categorizations were made according to the age and manner of committing burglary. Low-level burglars are usually amateurs and belong to the younger age group. Burglaries are committed based on opportunity alone or without planning. Once the opportunity to commit burglary presents itself, there is little time gap between the discovery of the opportunity and actual commission of the crime. Mid-range burglars are older than the low-level burglars. They usually have legitimate jobs and commit burglaries on occasion. They are not necessarily professional burglars. They are ...

Introduction

A potential buyer of a building vessel is seeking for a loan of 15 USD to cover the full price for the vessel. The market value of the vessel and the current financial crisis pose a danger to the financial institution. This is a proposal on how the bank can secure its position in this agreement.

Discussion

The market value is the highest price a buyer is willing to offer for a commodity and the lowest that a seller can accept for the commodity. Market values offer the actual financial situation surrounding a financial decision. However, during a financial crisis ...

Business

Question 1
In this case, the first loan agreement was between Agile Corporation and Hi Finance Company. The collateral attached to the loan protects the interest of the lender (HFC) such that if the borrower defaults, the lender can use the collateral against the amount borrowed. When a party enters into such transaction and a valid agreement is made, the transaction is secured. HFC, being the first lender, is referred to as the senior lender and has priority over the collateral. Metro Bank is the second lender hence the loan is junior to that of HFC. The interest of ...

Importance of underwriting standards to healthy real estate finance markets

Underwriting standards refer to guidelines established for ensuring that secure and safe loans are maintained and issued. The standards are crucial in setting the benchmarks on how much the debts can be issued, the loans’ terms, how much a company is ready and willing or can afford to issue as well as what rate of interest is to be charged.
The standards complement the Banks’ Acts, Loan and Trust Acts, Cooperate Credit Association Acts, Insurance Companies Acts’ relevant provisions and the governments’ mortgage insurance frameworks that are guaranteed and which establishes rules for the insured mortgages that are government-backed ( ...

In 2007 and 2008, both the housing industry and financial sector experienced a major lapse in performance. These two sectors, which are major players in the economy, had a great impact on the overall economy that was experienced by everyone. This essay will use the radio program by the name “the big pool of money” in order to explain the events that led to the drop in performance by these two sectors.
The housing sector was hit hard with the happenings that took place during the recession with rates for mortgages soaring the roof tops and many people lagged ...

Uiversity Name

Part A:
Annuity: Stream of equal cash flows that are to be paid to an investor at equal intervals over a period of time

Present Value: Today’s value of a cash flow that is to be received at some point in the future

Future Value: Amount to which a current deposit will grow over time when invested in an interesting paying instrument.
Amortization: Periodic allocation of the cost of intangible assets owned by the company over a period of time
Debt: An amount owed by an individual or an organization to the lender. It is represented in the form of bonds, bank loan, commercial paper, et cetera
Bond: A debt instrument issued by a borrower company to the ...

Article Summary

The article has various aspects of information that may have not been fully expounded in the book. The article talks of, “’Contingent Liabilities’ May Not Be So Contingent” and that, there should not be any disclosure required if claims have not yet been asserted. The article further stares that, “unless it is considered probable that a claim will be asserted and it is reasonably possible that the outcome will be unfavorable.”

‘Looking Behind the Balance Sheet’ is what else is covered in the article that its idea is not found in the book. This phrase refers ...

Debt Financing is borrowing money from a source outside the organization with a promise to repay it along with a certain amount of interest. Debt financing carries a burden of interest on the borrower. It also carries the burden of repayment of the principal amount after a certain period of time. Debt financing is by bank, private companies or borrowings from friends and family. Borrowing an amount from bank or borrowing money from a friend are examples of debt financing. The benefits of debt financing are that the rate of interest is lower and the borrower is able to get a tax deduction on the same. ...

Personal finance

Learning is a continuous experience that starts at birth. Although formal learning takes place within learning institutions, much of human learning is a product of experiences from life. Like in other areas of professional development, financially planning is a product of both formal and informal learning experiences. In this respect, multiple experiences throughout my life have shaped my financial planning skills. My learning experience with respect to financial planning is traceable to my days in college. Being in learning institutions calls for self-discipline and control with regard to financial. This offered the first and extremely important lessons with regard to financial planning. ...

Wealth, Status, and Opportunity in America

The article by Lewis helps the fortunate and unfortunate people to live through the most recent financial crisis and gain and understanding of occurrences that transpired. From the article, Lewin provides an in depth analysis of the factors and conditions, which led to the financial crisis. The most recent financial crisis is considered as the worst financial crises that ever affected the globe. This is because it was characterised by the collapse of leading companies, banks and other financial institutions. This financial crisis also brought about the collapse of the mortgage market mainly in the United States and also ...

The Step of the Risk Management Process

The risk management process is comprised of five core steps. The first is the identification of risks. At the heart of this phase is to identify what is likely to hinder the ability to meet the targeted goals. After the risk has been identified, the next step is to analyze it. This stage requires one to determine the probability and the consequences of the identified risk(s). It assists a person or a group to understand the inherent nature of the risk along with the potential effects on the set goals. The third step is the risk ranking or ...

Personal Finance

Personal Finance

Introduction

The economy of the United States impacts personal finance either directly or indirectly. Importantly, the government regulates personal finance through interest rates and taxes. Most taxes are directed to social programs to help the needy. Due to income disparities, citizens opt to acquire credit cards from local banks or other lenders. The credit card allows consumers to spend in advance and keep track of their expenditure. However, those who settle their credit card balance late, pay high-interest rates. The purpose of this paper is to address the role of government in the personal finance. Also, the paper ...

Abstract

Debt covenants have become one of the major issues that affect the operations of the firm. Many scholars have come up with different ways in which they can leverage this problem. There are many theories of corporate governance that try to solve these problems that face managers of financial institutions. Most of these theories defy the debt covenant perspective and the corporate governance problems in relation to how equity and debt holders affect the director’s ability to act in the interests of the providers of capital. Banks as financial intermediaries have special attributes that increase the standard corporate ...

Introduction

Money can be defined as something that is accepted in the society as a medium of exchange and also acts as store of value as well as measure of value. Interest, on the other hand, is the amount paid by the borrower of money to the lender for receiving the benefit or privilege of holding the money for a period of time. In this study we attempt to trace the origin and evolution of money and this history is also closely related to the origin and history of interest on loans.

Origin and Evolution of Money

Before money came into being barter system existed ...

Definition of the microcredit

Microcredit is the main tool of the microfinance concept, which is considered to be invented by the Professor Mohammad Yunus, the founder of Grameen Bank in Bangladesh. As it is stated on the Crammen Bank web page, a microcredit is a program of small loans, offered to the poorest people so that they could generate income through self-employment projects (Grameen Bank, 2012). Microcredit can be also defined as a small loan to poorer households or small entrepreneurs, that lack steady employment and a verifiable credit history. In most cases microcredit does not require any collateral, as its target audience ...

The global recession of 2008 the worst recession the world has seen till date. The recession was not caused by business cycle fluctuations but by the financial bubble. This recession is often referred to as the sub-prime crisis as this was the result of sub-prime lending that created the property bubble that burst in 2008 to create the huge recession. In this paper we are going to discuss how this lending procedure emerged and how it led to the bankruptcy of a number of financial institutions.
During 2007 the Fed rates were quite low. The low interest rates induces ...

One of the causes that have resulted to the global economic crisis in the last decade has been the issue of mortgage securitization. A good example is the Florida mortgages. Most retirees from Norway were involved in securing mortgages. Different financial links can be identified into how these individuals got involved in the mortgage securitization. Ideally, the process began with a simple home purchase, where the seller got cash from the buyer to secure ownership of the house. The homebuyer had to obtain cash by signing a mortgage loan agreement with the originator (mortgage brokers) who in turn got cash by ...

Abstract

The U.S. Constitution allows debtors to lift the burden of debt - in whole or in part, if the debtor can no longer meet its obligations to creditors. For consumers there are two main types of bankruptcy. Chapter 7 of the Bankruptcy Code allows you to perform their obligations to creditors "in one go", and Chapter 13 presumes the debtor payment plan. Sometimes, the personal bankruptcy process can be carried out by using Chapter 11.

Chapter 7

This part of the U.S. bankruptcy law allows you to get rid of all or part of the debt after the repayment of ...

Subprime mortgage is type of mortgages usually issued to borrowers with low credit rating. As a result the borrower isn’t offered with standard mortgage terms because the lender assesses the risk of default on such borrower much more above the average. Lending institutions often charge interest on subprime mortgages at a higher rate, compared to the standard mortgage to compensate for a greater level of risk.
In 2004 the interest rate was 1%. Money was almost free of charge, which led to a fundamental change in the behavior of banks. Customers had no longer to convince banks to give them money. ...

INVESTMENT PROPOSAL

Executive summary
The business idea that is in effect for execution is founding a cleaning service business. A cleaning service business is a low-cost but detailed entity is engaged with a lot of expertise and capital formation to start up. In this case, a suitable title for this entity is Best Homes Cleaners. The cleaning service business entity is categorized as one of the most amazing low-tech businesses. The low level of technology is one of the factors that are encouraging the decision to invest in the sector of operation. Ideally, it will require a proper level of mastery of the job. First, ...

One of the most important issues that currently face the financial markets is student debts. Many people hope to realize their life long goals of completing college, university, or professional studies, but are not able to afford it. Furthering your education will not only help you to be more successful in life, but it will also give you a deeper understanding of many aspects of life. “The decision as to whether to invest in one’s human capital in the form of education requires that an individual compare the present discounted value of benefits—among which are the gains in ...

Analysis: Galaxy Skis

Answer 1)

Pros:
a) Cushion of additional capital:
The primary advantage offered by IPO is that it provides assistance to the companies in raising additional capital for their future projects without any obligation to repay back to the shareholders. This helps the company to leverage the acquired capital in more R&D arena, intense marketing strategies and also make them capable to invest in some risky yet profitable projects which can increase the market share of the company and also the probable future returns to the shareholders.
b) Enhanced Corporate Image and increased customer base:
Moreover, a successful IPO ...

Essay: Global Financing Strategy

1 If Germany imposes interest rate ceilings on German bank deposits, what is the likely effect of this regulation on the euro interest rate?

While Germany does not have any statutory laws governing the ceilings on interest rates, the morality of a credit contract is required to be analyzed by a court, as per the Federal Court of Justice. The contract is said to be excessive when the interest being charged amounts to twice the average market interest rate for a specified duration .

Germany uses subjective controls to limit extortionate credit practices. However, should it choose to impose an interest ceiling on ...

The conventional case associated with undue influence, although not necessarily so labeled, is categorized within the typical rubric associated with unconscionability. The idea entails situations in which one particular individual brings to bear mental pressure with substantial force as well as taking length of time contrary to the will belonging to another individual that, while with complete lawful capacity, could possibly be irresolute, weak or perhaps vulnerable. Virtually any contract involving the party that exerts the particular influence and also the party that gives in to it all is unlikely to give good results in the pursuits associated with ...