A problem with collateral is that its value is positively correlated with the borrowers ability to repay.

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A problem with collateral is that its value is positively correlated with the borrower’s ability to repay. Explain.

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Introduction to Corporate Finance

ISBN: 978-0324657937

2nd edition

Authors: Scott B. Smart, William L Megginson

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Question Posted: May 13, 2015 06:01 AM

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A problem with collateral is that its value is positively correlated with the borrowers ability to repay.

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Collateral is all or part of a firms assets If the firm is financially distressed and potentially ...View the full answer

Introduction to Corporate Finance

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