Ask Question
BusinessBusiness
16 July, 04:12

Burns borrowed $240,000 from Dollar Bank as additional working capital for his business. Dollar required that the loan be collateralized to the extent of 20% and that an acceptable surety for the entire amount be obtained. Surety Co. agreed to act as surety on the loan, and Burns pledged $48,000 of negotiable bearer bonds. Burns defaulted. Which of the following statements is true?

A. Dollar must first liquidate the collateral before it can proceed against Surety.

B. Surety is liable in full immediately upon default by Burns but will be entitled to the collateral upon satisfaction of the debt.

C. Dollar must first proceed against Burns and obtain a judgment before it can proceed against the collateral.

D. Surety may proceed against Burns for the full amount of the loan even if Surety settles with Dollar for a lower amount.

+4
Answers (2)
  1. 16 July, 04:37
    0
    Answer is B. Surety is liable in full immediately upon default by Burns but will be entitled to the collateral upon satisfaction of the debt.

    Explanation:

    Burns borrowed $240,000 from Dollar Bank as additional working capital for his business. Dollar required that the loan be collateralized to the extent of 20% and that an acceptable surety for the entire amount be obtained. Surety Co. agreed to act as surety on the loan, and Burns pledged $48,000 of negotiable bearer bonds. Burns defaulted. The following statement is true:

    Surety is liable in full immediately upon default by Burns but will be entitled to the collateral upon satisfaction of the debt.
  2. 16 July, 04:38
    0
    B - Surety is liable in full immediately upon default by Burns but will be entitled to the collateral upon satisfaction of the debt.

    Explanation:

    A surety comes to play when a party lacks certainty about whether or not another party in a contract will be able to fulfill all stated requirements. The other party could be required to provide a guarantor, who will be involved in the contract of suretyship. The essence of this is to reduce possible risks for the lending party.

    This surety bond involving 3 parties, allows the lending party, file a claim against the bond to recover losses incurred, if the borrower fails to adhere to the terms previously stated.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Burns borrowed $240,000 from Dollar Bank as additional working capital for his business. Dollar required that the loan be collateralized to ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
If a recession caused millions of people to lose their jobs and millions more to fear unemployment, which of the following will happen?
Answers (1)
A construction management company is examining its cash flow requirements for the next 7 years. The company expects to replace software and infield computing equipment at various times over a 7-year planning period.
Answers (1)
Proper planning ensures a healthy balance between economic growth and environmental sustainability of a nation economically and environmentally." Agree or disagree with the statement with relevant exam. ples
Answers (1)
g On July 1 the Swifty Corporation paid $18240 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount.
Answers (1)
The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000.
Answers (1)
New Questions in Business
In the United States, you can own anything you want and decide what you want to do with it, as long as it does not violate the law. This describes the principle of
Answers (1)
High value-added per employee is associated with: a. capital intensive industries. b. labor intensive industries. c. the shoe industry in 1860. d. the use of unskilled labor.
Answers (1)
How were the earliest benefits of the industrial revolution distributed between Factory owners and workers?
Answers (1)
Ben and Sam Jenkins formed a partnership. Ben contributed $8,000 cash and a used truck that originally cost $35,000 and had accumulated depreciation of $15,000. The truck's fair value was $16,000. Sam, a builder, contributed a new storage garage.
Answers (1)
Select all that apply. A primary incentive for entrepreneurs is 1: Profit 2: A skill and happy workforce 3: Notoriety 4: Seeing an idea come into being 5: Paying taxes
Answers (1)
Home » Business » Burns borrowed $240,000 from Dollar Bank as additional working capital for his business. Dollar required that the loan be collateralized to the extent of 20% and that an acceptable surety for the entire amount be obtained. Surety Co.
Sign Up Forgot Password?