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

Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
ChapterST5: The Great Recession Of 2008-2009: Causes And Response
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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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