If You Were Asked to Loan Money to a Company

Multiple Choice

If you were asked to loan money to a company that you feared may be getting into financial difficulties, which of these courses of action would provide you with the most protection from default on the loan?

A) Rely on the principle of limited liability.
B) Require a mortgage over a specific asset of the company.
C) Require the accounts of the company to be audited.
D) Specify a particular accounting method to be used.