11. Answer the following questions based on text b:

1. What presents a most probable source of financial trouble for a bank?

2. What do banks have to take into account while pricing their loans?

3. Why should business loans be taken special care of?

4. What are the uses of bank loans?

5. Why do banks switch from extending short-term loans to granting long-term ones?

6. What makes leases attractive both for banks and for their customers?

12. Make up sentences of your own using the following expressions from text b.

Highest-yielding assets, to make a review of the bank's loan portfolio, to price the loan, to make short-term loans, farm real estate credit, to meet the specific credit needs, to be sup­planted, to carry greater risk, equipment leasing plans, changeable market conditions.

13. Say what is true and what is false. Correct the false sen­tences.

1. Loans present the middle-yielding assets of bank's portfolio.

2. Usually examiners make a thorough review of the bank's loan portfolio.

3. The most difficult task in lending to business firms is to decide the amount of loan.

4. To grant an overdraft is the traditional method of providing funds.

5. The overdraft is granted only to the credit worthy customers.

6. Banks usually extend loans only in small denominations in order not to be at risk.

7. Most loan officers are eager to provide a loan without any collat­eral.

8. In recent years banks have lengthened the maturity of their busi­ness loans.

9. The lease can't be an equivalent of a loan.

10. Only state banks are lenders in the real estate fields.

14. Using the words in brackets, explain the meaning of the following terms:

obligation (must, indebtedness, to repay);

estate (to possess, the holdings and obligations, property);

expected return (profits, earnings, income, to wait for);

open note (to grant, the repayment, not guaranteed, collateral security);

stipulate (to insist on, to state, to discuss, particular date);

trust (the legal responsibility, financial matters, to give to one party, to act, on one’s behalf);

retire present debts (current, to pay off, to illuminate, obligations).

15. Match the following words with the correct definition from the list.

Loan, lease, maturity, profitability, collateral, credit, mortgage,

lender, borrow

1. Documents giving title to property rights which are deposited with a creditor as security for a loan and returned on repayment of the loan.

2. Provision of funds to customers by means of loans, overdraft facilities, etc.

3. Property title which is transferred by the borrower of money to the lender as security for the loan.

4. Get temporary use of money to be returned.

5. The transaction wherein an owner of property, called the lender, allows another party, the borrower, to use the property.

6. Extent to which a profit can be made, either by companies or by divisions etc. within companies.

7. A contractual agreement whereby one party uses an asset — land, building, etc. — which is owned by another, for a stated period and in return for a regular payment.

8. An individual or a firm that extends money to a borrower with the expectation of being repaid, usually with interest.

9. The date on which a loan or a deposit must be repaid.