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
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
Section: Chapter Questions
Problem 5CQ
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Question
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5027d8d7-33bd-472a-8fa1-cf0001fcc1bf%2F80ad806f-1355-40d3-b1f5-0b542b30b516%2F7pag0io_processed.png&w=3840&q=75)
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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