Name _______________________________ Section______________ ID#______________Agricultural Economics 330Fall 2005Exam III1. List and describe the 5 credit factors that lenders need to consider whenevaluating a commercial agricultural loan. (15 points).2. As farmers and ranchers pursue value added business opportunities,many of their efforts will fail because they overlooked one or more criticalissues in the process of developing their business plan and evaluatingthe opportunity. Identify at least 8 issues that producers often fail toaddress. (15 points)3. Lenders evaluate commercial agricultural loans like they do any otherbusiness loan. In order to be in a position to make a strong loanpresentation and to negotiate the best terms possible, what are the 12questions we went over in class that farmers and ranchers need to beprepared to answer? (18 points)4. I discussed several characteristics of successful farm executives. Eightof them are listed below. Please describe/discuss some of the attributesassociated with each. (16 points)a. They anticipate and adapt to the changing needs of their markets.b. They are strategic thinkers.c. They are able to identify strengths and weaknesses in people,including themselves.d. They spend more time thinking about what if scenarios anddeveloping contingency plans.e. They see change and challenges as opportunities and don’t tend toview themselves as victims.f. They spend more time on monitoring and analysis.g. Their approach to management is more balanced across the keyperformance areas.h. They are more likely to seek input and expertise from outside thebusiness.5. What are the 2 areas in which preferred stock has priority over commonstock? (6 points)6. Why does a closely held business with multiple owners need a buy:sellagreement signed by the owners and their spouses? (6 points)7. What are a least 2 reasons why an investor in a closely held businessmight prefer convertible debt over preferred stock? (6 points)8. In the discussions of both top managers and successful familybusinesses, I talked about the importance of communication. What aresome of the things that they do to be more effective than theircounterparts? (6 points)9. When there are more than one potential successors to assume the CEOposition, why is it important to establish a clear basis for successorselection? (6 points)10. If it is so important, why don’t most family businesses engage in strategicplanning? (6