Two firms each seek a $100,000, three-month, short-term loan from the same financial institution. One firm walks away with an unsecured loan, and the other leaves with a secured loan. Which firm’s loan is probably more expensive? Explain why trade credit from suppliers is a “spontaneous source of funds.”

Answer rating: 100% (QA)

Unsecured loans are made on the basis of the firms creditworthiness and the lenders previous experience with the firm An unsecured borrower does not have to pledge specific assets as security The thre... View the full answer