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    Corporate Finance: Loans, Credit, and Collateral

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    A) What are some advantages to borrowing short term?

    B) Is collateral a means for affecting interest rate?

    C) What are some advantages and disadvantages of having a bad credit vs good credit in terms of getting a loan?

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    A) Advantages to borrowing short term include a lower interest rate, you can leverage the short-term loan to make a profit within a year, and short-term loans are easier to get approved for than a long-term loan.

    B) Definitely, collateral is a means for effecting the interest rate granted to you; especially if the ...

    Solution Summary

    This solution discusses the advantages of borrowing short term and having good credit, and explains how collateral affecting the interest rate of a loan.