Exam 26: Finance Companies

On average, finance companies have a capital-to-total-asset ratio that is ________ than that of banks and savings and loans.

Many retailers established finance companies to provide financing for their customers. Although these finance subsidiaries did increase sales, the subsidiary was typically unprofitable.

Like the consumer finance market, finance companies face many regulations in the business loan market.

Installment credit is a loan that requires the borrower to make a series of equal payments over some fixed length of time.

Consumer finance companies typically make loans to consumers who

Finance companies essentially sell commercial paper and use the proceeds to make loans.

Finance companies are ________ market intermediaries.

By the beginning of 2010, banks held $1,177 billion in consumer loans. Finance companies held about ________ of that figure.

What are the various types of finance companies?

The earliest examples of finance companies date back to the beginning of the ________ when retailers offered installment credit to customers.

Describe how floor plans work in the automobile industry. Why can finance companies offer these arrangements at a lower cost than banks?

What is default risk?

Lease financing is an example of a business financing need not served by most banks.

In which industry is factoring a common practice?

In which industry is factoring a common practice?

Factoring refers to purchasing a firm's accounts receivables at a premium.

In the early 1900s, banks did not offer loans to purchase automobiles. This is because

Describe the process of factoring? When and why is it used?

A balloon loan requires

In which industry is a floor plan common practice?