Why do analysts investigate the bank lines of credit that a corporation has?
What will be an ideal response?
Analysts investigate the bank lines of credit because a firm's bank lines of credit often constitute a significant portion of its total debt. These lines of credit should be closely analyzed in order to determine the flexibility afforded to the company. The lines of credit should be evaluated in terms of undrawn capacity as well as security interests granted. The analysis also involves a determination as to if the line contains a "material adverse change" clause under which the bank may withdraw a line of credit.
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Indicate whether the statement is true or false
The expected value and expected opportunity loss criteria result in:
A) the same decision. B) different decisions. C) similar decisions. D) all of the above