Irene conducts a fish wholesaling business. Her primary market is restaurants in Melbournes CBD. The business had
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Question:
Irene conducts a fish wholesaling business. Her primary market is restaurants in Melbourne’s CBD. The business had prospered for some years, earning approximately $1,000,000 in annual profits, but deteriorated when Irene began spending many business hours at the casino. Irene had also lost a considerable amount of money gambling: $10,000,000. She approached her bank, Second National. They refused to grant her any more credit unless the following occurred:
- Irene obtained a personal guarantee from her sister Effie- who had approximately $15,000,000 in her bank account, also with Second National.
- The loan plus interest must be repaid within 5 years. If not, then Second National would take ownership and control of the business completely.
Advise Irene.
- Second National’s request above will breach the Code of Banking Practice.
- Second National’s request above would be unconscionable.
- Second National’s request above complies with the Code of Banking Practice and is not unconscionable.
- None of these answers are correct.
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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