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Which of the following statements is FALSE? Select one: O a. Base lending rate of a loan does not depend on the credit risk of borrower O b. Short-term loans are appropriate to finance seasonal increase in inventory of a bank's client The interest rate on a floating rate loan is reset periodically by the bank O d. Higher leverage of a borrower increases the credit risk to the bank

Which of the following statements is FALSE? Select one: O a. Base lending rate of a loan does not depend on the credit risk of borrower O b. Short-term loans are appropriate to finance seasonal increase in inventory of a bank's client The interest rate on a floating rate loan is reset periodically by the bank O d. Higher leverage of a borrower increases the credit risk to the bank

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter17: Financial Markets
Section: Chapter Questions
Problem 37P: Imagine that a local water company issued 10,000 ten-year bond at an interest rate of 6. You are...
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Which of the following statements is FALSE? Select one: Base lending rate of a loan does not depend on the credit risk of borrower Short-term loans are appropriate to finance seasonal increase in inventory of a bank's client The interest rate on a floating rate loan is reset periodically by the bank O d. Higher leverage of a borrower increases the credit risk to the bank O e. All else remaining same, secured loans are usually costlier than unsecured loans to the borrower
Transcribed Image Text:Which of the following statements is FALSE? Select one: Base lending rate of a loan does not depend on the credit risk of borrower Short-term loans are appropriate to finance seasonal increase in inventory of a bank's client The interest rate on a floating rate loan is reset periodically by the bank O d. Higher leverage of a borrower increases the credit risk to the bank O e. All else remaining same, secured loans are usually costlier than unsecured loans to the borrower
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