Which of the following is NOT a practice that prevents risk-shifting by a borrower?
A) limited-liability ownership
B) placing liens on collateral
C) personal guarantees
D) restrictive covenants

Question

Quizplus · Accepted Answer

Limited-liability ownership is a practice that allows the borrower to limit their personal liability to the amount invested in the business but it does not necessarily prevent them from shifting risk. Placing liens on collateral, personal guarantees, and restrictive covenants are all practices that discourage risk-shifting by holding the borrower accountable for their actions and ensuring they have a stake in the success of the loan.

Which of the Following Is NOT a Practice That Prevents