Question: You are considering making a working capital loan to a company that manufactures and distributes fad items for convenience and department stores. The loan will

You are considering making a working capital loan to a company that manufactures and distributes fad items for convenience and department stores. The loan will be secured by the firm’s inventory and receivables. What risks are associated with this type of collateral? How would you minimize the risk and periodically determine that the firm’s performance was not deteriorating?

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