Why is it necessary for a business firm to put up collateral when it takes out a loan?
A) So that the bank can keep a portion as advance payment on the loan
B) To show the bank that the business is big enough to require the loan
C) To assure the bank that loan payments will be made as promised
D) So the financial managers know dates of payment
E) So that the accounting people can generate accurate financial statements
Correct Answer:
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